The ECB raises interest rates to 1.25% after agreeing to the largest increase in its history

Christine Lagarde, president of the BCEE was the chronicle of an announced rate hike. Discounted for months. The question was the amount: 50 basis points or 75. The deterioration in the outlook for price trends and the fall of the euro against the dollar (an inflationary factor) have forced the worst case scenario: the European Central Bank (ECB) has triggered the largest rise in interest rates in its history. Never before had the price of money increased so much in a single meeting. The official price of money stands at 1.25%. “The Governing Council has today decided to raise the three official ECB interest rates by 75 basis points. This important step anticipates the transition from the very accommodative level of official interest rates in force to levels that will ensure the timely return of inflation to the 2% medium-term objective of the ECB,” he explains in his statement this Thursday. The entity anticipates that it will not be the last rise. “The Governing Council expects to raise interest rates at upcoming meetings to moderate demand and protect against the risk of a persistent rise in the inflation outlook.” Prices in the euro zone rose by as much as 9.1% in August, a new all-time high and still show no sign of moderating. The closure of the main gas pipeline connecting Russia with Germany has added even more volatility and uncertainty to the context of energy prices in the coming months. “Inflation remains excessively high and is likely to remain above target for an extended period,” explains the ECB. The bank has revised its CPI forecasts “significantly upwards.” Now he expects it to be, on average, at: 8.1% in 2022.5.5% in 2023.2.3% in 2024. The increase in the official price of the moment coincides with a delicate economic moment in the eurozone. Some studies predict a recession in the case of Germany, one of the countries most affected by the Russian gas cut.