Particle.news
Download on the App Store
5 ARTICLES
·
last wk.

ECB To Raise Deposit Rate to 2.25% in Precautionary Move

The bank is acting to anchor inflation expectations after rising energy costs pushed euro‑zone inflation above the 2% target.

Dark clouds are seen over the building of the European Central Bank (ECB) in Frankfurt, Germany, June 6, 2024. REUTERS/Wolfgang Rattay//File Photo
The ECB is navigating the energy shock unleashed by the Middle East war
Image
Image

Overview

  • The ECB is due to meet on Thursday and is widely expected to lift the deposit rate from 2.00% to 2.25% as a precaution against higher energy-driven inflation.
  • Officials plan to publish updated forecasts that are likely to nudge near-term inflation projections closer to the bank's adverse scenario.
  • Financial markets have priced the chance of further rate rises later this year with the next possible move as soon as September.
  • The rise will raise borrowing costs for households immediately and will sharply increase repayments for Ireland's roughly 110,000 tracker mortgage holders.
  • Economists are split on the policy, with some warning the bank risks tightening into weak growth while others say a small, early hike is needed to protect the ECB's credibility.