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The European Central Bank has increased interest rates for the 10th consecutive time on September 14. The European Central Bank has taken this step to deal with inflation. However, the bank has also indicated that it will not increase the interest rates further at present. The European Central Bank is the central bank of the 20 countries that use the euro currency.
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The bank has increased the interest rate from 3.75% to 4%, Which is a record-high level. Stock market and economy experts believe that perhaps the ECB (European Central Bank) will not increase interest rates after this. The market was assuming that there would be no increase in interest rates.
But as soon as the news came that the ECB may increase inflation projections for 2024, projections started being made regarding the increase in interest rates.
ECB's decision on interest rate
The ECB's statement said, "Based on current assessments, the Governing Council believes that the ECB's interest rates have reached a level where, if kept stable over the long term, can help achieve its inflation target." Inflation in European Union countries is still running above 5% and is not expected to reach the ECB's target of 2% even for a long time.
This target will be difficult to achieve due to high wages in the labor market and an increase in energy costs. However, high-interest rates are adversely affecting growth prospects and even services. In such a situation, the risk of the economy reaching recession may increase.
ECB says, "Inflation continues to decline but it is still very high. The Governing Council is committed to ensuring that inflation reaches the medium-term target of 2%."
