Tuesday
August, 16

European Central Bank Increase Interest Rates To Combat Inflation

To rein in the spiraling inflation in the eurozone, the European Central Bank (ECB) increased interest rates for the first time in more than 11 years.

On Thursday, the ECB increased its benchmark interest rate by 0.5 percentage points to 0.0 percent, with more hikes anticipated later in the year.

Since 2014, the rate has been negative to incentivize banks to lend rather than make deposits with the bank.

In the year ending in June, consumer prices increased at a record-breaking rate of 8.6 percent.

That is significantly more than the bank’s aim of 2%.

The rate at which prices are rising is known as inflation. For instance, milk inflation is 5 percent if a bottle of milk costs €1 and goes up by 5 cents from a year ago.

READ MORE: Amazon Declares Presence In Nigeria With AWS Outposts

As prices rise, central banks around the world have started hiking rates, including the Bank of England and the US Federal Reserve.

Energy, fuel, and food prices have increased as a result of the war in Ukraine and Covid, placing pressure on households and slowing economic growth.

The dependence of the European Union on Russian oil and gas makes it vulnerable. This week, it advised members to start restricting supplies out of concern that Moscow will stop shipments, leading to shortages and more price increases.

After the 2008 financial crisis, the ECB started lowering interest rates to boost the economy, and during the pandemic, it lowered them as low as -0.5%.

Although economists had only anticipated a 0.25 percentage point increase in July, the government signaled earlier this year that it intended to raise them once more.

The European Central Bank (ECB) declared that additional rate increases “will be reasonable” and that they will be implemented “meeting by meeting.”

JOIN OUR NEWSLETTER

- Advertisement -

Our newsletter gives you access to a curated selection of the most important stories daily.

- Advertisement -

Must Read

Uchara Faith
Faith is a valiant writer who has an undisputed passion for writing. She has worked with many highly reputable companies as content creator, radio presenter. She has a book to her name titled ECHO OF A DISTRESSED HEART. She's goal driven oriented person.

To rein in the spiraling inflation in the eurozone, the European Central Bank (ECB) increased interest rates for the first time in more than 11 years.

On Thursday, the ECB increased its benchmark interest rate by 0.5 percentage points to 0.0 percent, with more hikes anticipated later in the year.

Since 2014, the rate has been negative to incentivize banks to lend rather than make deposits with the bank.

In the year ending in June, consumer prices increased at a record-breaking rate of 8.6 percent.

That is significantly more than the bank’s aim of 2%.

The rate at which prices are rising is known as inflation. For instance, milk inflation is 5 percent if a bottle of milk costs €1 and goes up by 5 cents from a year ago.

READ MORE: Amazon Declares Presence In Nigeria With AWS Outposts

As prices rise, central banks around the world have started hiking rates, including the Bank of England and the US Federal Reserve.

Energy, fuel, and food prices have increased as a result of the war in Ukraine and Covid, placing pressure on households and slowing economic growth.

The dependence of the European Union on Russian oil and gas makes it vulnerable. This week, it advised members to start restricting supplies out of concern that Moscow will stop shipments, leading to shortages and more price increases.

After the 2008 financial crisis, the ECB started lowering interest rates to boost the economy, and during the pandemic, it lowered them as low as -0.5%.

Although economists had only anticipated a 0.25 percentage point increase in July, the government signaled earlier this year that it intended to raise them once more.

The European Central Bank (ECB) declared that additional rate increases “will be reasonable” and that they will be implemented “meeting by meeting.”

JOIN OUR NEWSLETTER

Our newsletter gives you access to a curated selection of the most important stories daily.

Specially For You

- Advertisement -

Recommended

- Advertisement -
- Advertisement -