July 27 (UPI) — The European Central Bank raised interest rates by a quarter point in its ongoing efforts to tackle inflation.
The ECB announced an increase of 25 basis points for all three key interest rates, bringing refinancing, marginal lending, and deposit rates to 4.25%, 4.50%, and 3.75%, respectively.
“Inflation continues to decline but is still expected to remain too high for too long,” stated ECB President Christine Lagarde in a press conference. “We are determined to ensure that inflation returns to our 2% medium-term target in a timely manner.”
The ECB anticipates a further decline in inflation for the remainder of 2023, but it is projected to remain above the 2% target “for an extended period.”
Lagarde commented, “While some indicators show signs of easing, overall underlying inflation remains high. The previous rate increases continue to have a strong impact: financing conditions have tightened once again and are increasingly dampening demand, which is crucial for bringing inflation back to target.”
In June, Lagarde mentioned that the inflation rate had dropped to 6.1% from its peak of 10.6% in the eurozone. However, to achieve the target rate of 2%, interest rates will need to continue rising.
She emphasized the ECB’s commitment to the target rate, stating, “come what may.”
The ECB restated that its future decisions will be aligned with this objective, ensuring that the key interest rates remain at sufficiently restrictive levels for as long as needed to achieve a timely return of inflation to the 2% medium-term target.
For consumers, this implies that the tighter monetary policies will persist, affecting everything from loans to savings interest rates. It will make purchasing on credit more expensive, including mortgages and new cars.
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