The European Central Bank (ECB) raised its three official interest rates by 75 basis points each on Thursday, the move that was widely expected as the region is running with a 40-year high inflation rate at 9.1% in August of 2022 from 8.9% in July.
Among a 75 basis point hike from the European central bank, its key deposit rate, which provides the effective floor for money-market rates, to 0.75%, while the refinancing rate increased to 1.25% and the overnight lending rate rose to 1.50%.
“Based on its current assessment, over the next several meetings the Governing Council expects to raise interest rates further to dampen demand and guard against the risk of a persistent upward shift in inflation expectations,” the central bank stated in a statement detailing its decisions for rate hikes.
Price pressures have continued to strengthen and broaden across the economy and inflation may rise further in the near term,” the bank added.
The European Central Bank now expected economic growth in the region to grow only 0.9% in 2023 before extending to 1.9% the year after as it would return to pre-Covid level.