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ECB starts raising interest rates from July

During the policy meeting on June 9, the European Central Bank (European Central Bank)ECB) confirmed that it will start raising interest rates next July, to cope with high inflation rates, and at the same time lower the growth forecast of the Eurozone.

ECB officials said they will raise interest rates by 25 basis points at the July policy meeting and expect another rate hike in September, the size of which depends on the medium-term inflation outlook. .

The ECB also revised down its growth forecast eurozone economy this year from 3.7% to 2.8%, and raised the inflation forecast to 6.8% from 5.1%. The ECB must now try to strike a balance between curbing inflation, currently at 8.1 percent, and supporting economic growth.

The June 9 decision marks the end of years of ECB stimulus and looks more drastic than economists had expected. The ECB is currently lagging behind other central banks, with more than 60 central banks raising interest rates this year.

“This shows that the ECB seems to realize it is forced to try to catch up with other central banks in terms of raising rates. Once the key rate exits negative levels, the pace of rate hikes could slow down.” , said James Rossiter at TD Securities.

Immediately after the announcement of the ECB was released, European stock markets recorded a downward trend, with the region’s STOXX 600 index losing about 1.4 percent of its value.

Inflation increases pressure on ECB Inflation increases pressure on ECB – Inflation rate in Europe is reaching a record high. This is expected to increase pressure on ECB officials to act soon.

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