The ECB, led president Christine Lagarde, decided on Thursday to hike interest rates for first time in over a decade to fight inflation. Photograph: Michael Probst/APThe European Central Bank announced on Thursday that it was increasing its main rates by 0.5 percentage points, marking the first hike in euro zone official borrowing rates in 11 years.
On the other side of the Atlantic, the US Federal Reserve has been raising rates since March. This has contributed to a recent advance by the dollar against the euro which saw the two currencies temporarily reach parity last week for the first time in almost two decades.The ECB’s primary objective is to maintain price stability, which it sees as having an annual inflation rate of about 2 per cent over the medium term. As of last month, euro zone inflation was running at a record 8.
A lot of savvy borrowers have moved in recent times to fix their mortgages over the long term to remove uncertainty over borrowing costs. For example, borrowers can currently fix their rates at as low as 2.5 per cent for 25 years, if their loan is worth less than 60 per cent of the value of their property.
But haven’t I read headlines recently that Irish banks will be among the winners across Europe from rising ECB rates? Analysts expect that Irish banks profits will rise in the coming years on the back of rising ECB rates . This will will be driven by fact that the ECB will no longer charge banks negative rates for their excess deposits. Bank of Ireland and AIB’s combined deposits were €50 billion more than their total loans at the end of March, which had been turbocharged by household savings during the Covid-19 pandemic.
ECB is making sure it does not feel like a recession but it is a recession..
massive hit to alot of households, what happens when they have no money for discretionary spending, alot of closures and unemployed. Thank you Lagarde recession
In the photo : a gangster
It’s called going into a possible worldwide recession.