The ECB’s Governing Council has decided to raise interest rates by 25 basis points, in line with market expectations. This brings the reference rate for refinancing operations to 4.25%, the deposit rate to 3.75%, and the lending rate to 4.50%.
This ninth consecutive increase in the price of money marks the highest level in 16 years and completes a full year since the ECB began the current cycle of monetary policy tightening.
With the latest quarter-point hike, the ECB has now raised interest rates by 425 basis points since the rate increases commenced in July of the previous year.
Eurozone inflation declined to 5.5% year-on-year in June, down from 6.1% in May, representing the lowest increase in prices since January 2022. However, core inflation accelerated to 5.5%.
In the first quarter of 2023, the eurozone’s gross domestic product (GDP) showed no growth compared to the previous three months, where the region experienced a slight contraction of 0.1%. This revised figure narrowly helped the eurozone avoid entering a technical recession.