On Thursday, the 15th of December, the European Central Bank (ECB) decided to increase the main base interest rate by 0.5 percentage points – to 2.5%. This is the fourth consecutive time the ECB increases the interest rate.
During the ECB council’s meeting in Frankfurt it was also decided to increase the overnight deposit rate to 2% and overnight lending rate to 2.75%. Both of these rates were increased by 0.5 percentage points.
In the two previous meetings all three rates were increased by 0.75 percentage points. At the council’s meeting of the 21st of July, in an effort to battle high inflation, ECB decided to implement the first increase of interest rates in the past eleven years, increasing rates by 0.5 percentage points.
Inflation remains too high, and outlooks indicate that it will remain above the bank’s target for too long. It will be necessary to significantly increase interest rates at a steady rate, as noted in the council’s published announcement.
As previously reported, inflation in Eurozone dropped to 10% in November. Inflation was 10.6% in October.
This was the first drop in the last 17 months. However, despite this drop, inflation in Eurozone remains ten times higher than ECB’s target.
Also read: Inflation in Latvia reaches 21.8% in November