On Thursday, 8 September, the European Central Bank (ECB) decided to increase the main base interest rate by 0.75 percentage points to 1.25%.
ECB also decided at the council meeting in Frankfurt to increase overnight deposit rate to 0.75% and overnight loan rate to 1.5%. Both of these rates were increased by 0.75 percentage points.
This is the biggest interest rate increases in the history of the European Central Bank.
«This major step front-loads the transition from the prevailing highly accommodative level of policy rates towards levels that will ensure the timely return of inflation to ECB’s 2% medium-term target,» ECB Council reported.
«Price pressures have continued to strengthen and broaden across the economy, and inflation may rise further in the near term,» the council warns.
«Over the next several meetings the council expects the raise interest rates further to dampen demand and guard against the risk of a persistent upward shift in inflation expectations,» the statement mentioned.