Frankfurt, Jul. 27, (dpa/GNA) – The European Central Bank (ECB) is expected to announce a further interest rate increase on Thursday afternoon as part of its ongoing fight against persistently high inflation in the eurozone.
Economists expect a majority vote in favour of raising the benchmark interest rate by 0.25 percentage points.
ECB President Christine Lagarde had already indicated the possibility of another rate hike: “But our job is not done. Barring a material change to the outlook, we will continue to increase rates in July,” Lagarde said recently at a central bank conference in the Portuguese town of Sintra.
After years of near-zero and negative interest rates, the ECB has been raising rates in response to stubbornly high inflation, with eight consecutive increases since July 2022. The benchmark rate, at which commercial banks can borrow fresh funds from the ECB, now stands at 4%.
Higher interest rates can make loans more expensive, which may slow down demand and counteract high inflation rates.
The ECB’s medium-term goal for the eurozone is price stability with an inflation rate of 2%. Despite a slight decline, inflation remained well above the ECB’s target lst month: Consumer prices rose by 5.5% year-on-year in June, down from 6.1% in May.
GNA