On Thursday, 27 October, the European Central Bank (ECB) decided to increase the base interest rate by 0.75% to 2%.
During the meeting in Frankfurt, the ECB also decided to increase overnight deposit rate to 1.5% and overnight lending rate to 2.25%.
Both rates were increased by 0.75 percentage points.
These rates will come into force 2 November 2022.
The ECB Council decided to increase the aforementioned rates by 0.75 percentage points for the second consecutive time. The last time the council made this decision was 8 September.
At the meeting on 21 July the council decided to implement the first interest rate increase in 11 years in an effort to combat high inflation. The interest rate then was increased by 0.5 percentage points.
The post-meeting statement mentions this was the «third major policy rate increase in a row», as the council has accomplished significant progress in regards to ceasing stimulating monetary policy measures.
The council stresses that it expects continued growth of interest rates to ensure timely return of to its 2% medium-term inflation target.
Inflation remains too high and has remained well over the target for a long time. In September inflation in Eurozone exceeded 9.9%. The rapid climb of energy and food prices, as well as problems with the supply chain and recovery of demand after the pandemic observed in recent months caused price pressure to increase and inflation to grow. The goal of the council’s monetary policy is reducing support for demand and guarding against the risk of a sustained upward change in inflation expectations, as the council stated.
Also read: Euro value rises above U.S. dollar once again