The European Central Bank decided in its meeting today, Thursday, December 15, to raise interest rates by 50 basis points, as expected, to reach 2.5%.
And the interest statement issued by the bank stated that the board intends to continue raising interest rates in the upcoming meetings, as inflation is expected to remain above the target for a long time after it reached, according to Eurostat estimates, 10% in November, down from 10.6% in October.
Inflation reaches 8.4% in the current year, and decreases to 6.3% in the next year, to 3.4% in 2024 and 2.3% in 2025.
The eurozone economy may contract in the current and next quarter due to the energy crisis and the high level of uncertainty, as Eurosystem members see that the economy may grow by 3.4% this year, 0.5% next year, and 1.9% in 2024.
And the bank announced that with the beginning of March of next year 2023, the APP asset purchase program portfolio will decrease at a calculated and predictable pace, and the decline will reach 15 billion euros per month on average until the end of the second quarter of next year.
In the bank’s press conference, Christine Lagarde, the bank’s president, confirmed that it is expected that interest rates will be raised further in the upcoming meetings, with inflation rising.
The euro is trading at 1.0720, up by more than 100 points against the US dollar, benefiting from the bank’s expectations of continuing to tighten monetary policy.
01/11/2024
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