The European Central Bank has raised the key interest rate by 0.5 percent – higher than initially announced. Compared to the Federal Reserve and the Bank of England, however, rate hikes in the euro area are still moderate and will come much later, according to a chart from Statista.
The ECB decided to increase interest rates by 0.5 per cent under pressure from rising inflation rates in the Eurozone. Mudra Prahari had earlier announced an increase of only 25 basis points. This is the first rate hike since 2011. The base rate has been zero per cent since 2016. A more restrictive monetary policy should now revaluation of the euro and curb inflation. Financial professionals welcome the increase, but some criticize the move as too late.
The Statista chart shows that US and UK central banks have raised interest rates long ago. In December last year, the Bank of England (BoE) was one of the first major central banks to raise interest rates amid the coronavirus pandemic. Since then, interest rates have been hiked five times by 1.25 per cent. The US Federal Reserve (Fed) recently raised the most important interest rate by 0.75 percentage points to a . have makeTo the extent of 1.50 to 1.75 percent, It was not until spring 2020 that both the Fed and the BoE drastically reduced the key interest rate to mitigate the economic consequences of the coronavirus.
Even in the euro area, this is unlikely to be the only interest rate hike. The ECB announced a further hike in rates at its council meeting on Thursday. According to experts, by the end of the year, the prime interest rate can be one percent. “The future interest rate path of the Governing Council will be dependent on the state of the data and contribute to meeting the Governing Council’s medium-term inflation target of 2 percent,” the central bank said in a statement.