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ECB Increases Rates And Suggests Further Tightening.

London, Thursday, 15 December 2022

During its final monetary policy meeting of 2022, the ECB increased interest rates by 50 bps, which was the fourth rate increase overall after two successive 75 bps increases.

This results in the deposit facility reaching 2%, the refinancing rate reaching 2.5%, and the marginal lending reaching 2.75%—levels not seen in fourteen years.

Rates are anticipated to climb higher, according to policymakers, as a result of a significant upward revision to the inflation outlook.

The average inflation rate is now expected to hit 8.4% in 2022 before falling to 6.3% in 2023, according to revised inflation predictions. Then, an average of 3.4% in 2024 and 2.3% in 2025 are predicted for inflation.

In terms of GDP, the energy crisis, high levels of uncertainty, a slowing global economy, and more restrictive financial conditions may cause the Euro Area economy to decrease in the current quarter and the following quarter.

According to the central bank, the economy would expand overall by 3.4% in 2022, 0.5% in 2023, 1.9% in 2024, and 1.8% in 2025.

(Source: European Central Bank // Report by: The Decision Maker)


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