Eurozone faces highest interest rates in decade – Bloomberg – RT Business News

European Central Bank plans another 75 basis point hike to curb inflation, despite fears of recession

The European Central Bank (ECB) is expected to double its benchmark interest rates on Thursday, Bloomberg reported, citing the regulator’s push to rein in record inflation in the euro zone.

The ECB will opt for a second consecutive hike of 75 basis points, said economists polled by Bloomberg. The Associated Press predicted the same increase, based on public comments from bank officials.

In September, the ECB raised its three key interest rates for the euro area by three quarters of a percentage point: the interest rate for the main refinancing operations was raised to 1.25%, the rate for the facility deposit rate was set at 0.75%, and the marginal lending facility rate was set at 1.50%. According to data from the regulator, the same level of interest rates was last seen ten years ago.

The ECB is trying to control an inflation rate which is currently around 10%, ie five times more than its target level.

The interest rate influences costs for consumers and businesses. Higher rates mean less borrowing and less consumption, which dampens price growth. However, the resulting slowdown in economic activity could lead to a recession, which many economists have predicted in the EU at the end of this year and the beginning of next year.

Some European leaders, such as Italy’s new Prime Minister Giorgia Meloni and French President Emmanuel Macron, have spoken out against interest rate hikes.

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