The European Central Bank decided on Thursday to raise its three key interest rates for the eighth time in a row, this time by 25 basis points. The interest rates on the main refinancing operations, the marginal lending facility, and the deposit facility have been increased to 4%, 4.25%, and 3.50%, respectively.
Today's rate hike was in line with market expectations, pushing interest rates to their highest level in the last 22 years. At the same time, the ECB confirmed it will halt reinvestments under its €3.2 trillion Asset Purchase Program from July.
The ECB revised up its inflation projections in today's policy decision. It now sees inflation reaching 5.1% in 2023, energy and food excluded, before it declines to 3% in 2024 and 2.3% in 2025. At the same time, the central bank's staff slightly lowered their economic growth projections for the next two years. They now expect the Eurozone economy to grow by 0.9% in 2023, 1.5% in 2024 and 1.6% in 2025.
