Informist, Thursday, Oct 27, 2022
NEW DELHI – The European Central Bank today raised its policy rates by 75 basis points, the third time in a row, and hinted at more such hikes in an attempt to tame inflationary pressures.
Accordingly, the interest rate on the main refinancing operations, marginal lending facility and deposit facility will be increased to 2.00%, 2.25% and 1.50%, respectively, with effect from Nov 2, the central bank said.
"With this third major policy rate increase in a row, the governing council has made substantial progress in withdrawing monetary policy accommodation," the central bank said in a release.
The central bank's governing council expects to raise interest rates further, to ensure the timely return of inflation to its 2% medium-term inflation target.
"The governing council will base the future policy rate path on the evolving outlook for inflation and the economy, following its meeting-by-meeting approach," the central bank said.
Inflation remains "far too high" and will stay above the target for an "extended period", it noted. In September, inflation in the euro area had reached 9.9%.
In recent months, soaring energy and food prices, supply bottlenecks and the post-pandemic recovery in demand have led to broadening of price pressures and an increase in inflation, the central bank said.
"The governing council's monetary policy is aimed at reducing support for demand and guarding against the risk of a persistent upward shift in inflation expectations."
The ECB expects inflation to average 8.1% in 2022, 5.5% in 2023, and 2.3% in 2024. End
Reported by Priyansh Verma
Edited by Avishek Dutta
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