{"id":26511,"date":"2022-06-09T11:06:00","date_gmt":"2022-06-09T15:06:00","guid":{"rendered":"http:\/\/irishexaminerusa.com\/wp\/?p=26511"},"modified":"2022-06-10T11:09:07","modified_gmt":"2022-06-10T15:09:07","slug":"ecb-to-raise-interest-rates-for-first-time-in-eleven-years","status":"publish","type":"post","link":"https:\/\/irishexaminerusa.com\/wp\/?p=26511","title":{"rendered":"ECB To Raise Interest Rates For First Time In Eleven Years"},"content":{"rendered":"\n
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The July rate hike will be the first in 11 years (PA)<\/em><\/figcaption><\/figure>\n\n\n\n

The European Central Bank (ECB) said on Thursday that it would carry out its first interest rate increase in 11 years in July, followed by another hike in September.<\/p>\n\n\n\n

The surprise announcement of two quarter-point increases came after the bank\u2019s 25-member monetary policy council met in Amsterdam, saying inflation had become a \u201cmajor challenge\u201d and that those forces had \u201cbroadened and intensified\u201d in the 19 countries that use the euro currency.<\/p>\n\n\n\n

It also will end its economic stimulus program next month.<\/p>\n\n\n\n

The move underlines concerns about the level of annual consumer price increases, which hit 8.1 per cent in May, the highest since statistics started in 1997. The bank\u2019s target is 2 per cent.<\/p>\n\n\n\n

The ECB held out the possibility that it would make a more drastic, half-percentage-point increase in September rather than the more usual quarter-point adjustment, saying that if the inflation outlook persists or deteriorates, \u201ca larger increment will be appropriate at the September meeting\u201d.<\/p>\n\n\n\n

The US Federal Reserve raised its key rate by a half-point on May 4th and has held out the prospect of more such large increases. The Bank of England has approved hikes four times since December.<\/p>\n\n\n\n

The prospect of rapid central bank rate increases has sent shudders through stock markets, as higher rates would raise the returns on less risky alternatives to stocks.<\/p>\n\n\n\n

Raising rates in Europe is also complicated by weakening prospects for economic growth as Russia\u2019s war in Ukraine sends shock waves through the global economy.<\/p>\n\n\n\n

Higher rates can make credit more expensive for businesses. The bank\u2019s statement said

buy kamagra 100mg<\/a><\/p> , however, that the path of increases would be \u201cgradual but sustained\u201d.<\/p>\n\n\n\n

Markets are now waiting to hear more detail from bank president Christine Lagarde at her post-meeting news conference.<\/p>\n\n\n\n

The meeting was held in Amsterdam as one of the bank\u2019s occasional gatherings away from its headquarters in Frankfurt, Germany.<\/p>\n\n\n\n

\u201cHigh inflation is a major challenge for all of us,\u201d the bank said in its policy statement.<\/p>\n\n\n\n

\u201cThe governing council will make sure that inflation returns to its 2% target over the medium term.\u201d<\/p>\n\n\n\n

Higher rates are the usual tool to combat inflation. By raising its benchmarks, the central bank can influence what financial institutions, companies, consumers and governments have to pay to borrow the money they need. So higher rates can help cool off an overheating economy.<\/p>\n\n\n\n

But higher rates can also weigh on growth. That makes the ECB\u2019s job a delicate balance between snuffing out inflation and blunting economic activity.<\/p>\n\n\n\n

The ECB on Thursday slashed its growth projection for this year to 2.8 per cent from 3.7 per cent.<\/p>\n\n\n\n

It raised its outlook for inflation, saying that price increases would average 6.8 per cent this year, higher than the 5.1 per cent forecast in its March outlook, while the crucial forecast for 2024 was raised to 2.1 per cent from 1.9 per cent. – Associated Press<\/strong><\/p>\n

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