The European Central Bank decided in its meeting moments ago today, Thursday, June 15, to raise interest rates by 25 basis points, as expected, to reach 4%.

The interest statement issued by the bank stated that inflation expectations are still very high, despite their recent decline, and that the Board of Directors is determined to ensure that inflation returns towards the bank’s medium-term target of 2% in a timely manner.

The bank revised their expectations for the main inflation for this year, as the bank expects the inflation rate to reach 5.4% in the current year, 3% in the next year, and 2.2% in the year 2025, while the bank expects that the basic inflation, which excludes food and energy prices, will decrease to 5.1% in the current year. And to 3% next year, and the bank lowered its forecast for economic growth for this year by 0.9% this year, 1.5% next year, and 1.6% in 2025.

The Bank’s decisions today will ensure that interest rates are raised to levels that are constrained and sufficient to bring inflation back to target in a timely manner and that a data-driven approach will be used to determine the appropriate level.

The Board announced that the APP portfolio is declining at a measured and predictable pace, and the decline will reach 15 billion euros per month, on average, until the end of June 2023.

The Board expects to stop reinvestment operations as of next July. With regard to the PEPP program, the Board intends to reinvest the principal payments purchased until at least the end of 2024.

After less than half an hour, the markets are waiting for the bank’s president Christine Lagarde’s press conference to answer journalists’ questions.