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The European Central Bank raises interest rates by 75 basis points, in in line with expectations

The European Central Bank has raised interest rates at the same pace as the Federal Reserve’s recent moves as it battles the worst inflation in decades.

The European Central, led by Bank President Christine Lagarde, announced a massive increase, in in line with expectations, by 0.75 percentage points for the second consecutive meeting, bringing the reference rate of the 19 countries sharing the euro to 1.5. The decision comes a week before the US Federal Reserve meeting, when the bank is expected to make a fourth consecutive hike of this size, bringing the US interest rate to between 3.75% and 4%.

Like most central banks around the world, the European Central Bank is once again struggling to control inflation after energy prices soar quest’year. The inflation rate in thearea of the euro reached 10% last month, compared to my target level of 2%.

At the same time, the outlook for the economy looks bleak. Last month, the European Central Bank predicted that growth in the region would slow to 0.9% next year from 3.1% in 2022. Lagarde at the time said a recession was a risk during the winter.

The European Central Bank is raising interest rates at a fast pace now, but it began long after similar moves by the Federal Reserve. European politicians raised their benchmark interest rate for the first time in a decade in July, ending the era of negative rates that began in 2014. An increase of 0.75 percentage points followed in September.

One reason for the delay was the possibility that long-term interest rates, determined by government bond yields, may rise more rapidly in some countries than others.

Bond yields fell this week as investors put in in doubt the decisions of the European Central Bank on raising interest rates after this month. Natural gas prices have dropped dramatically, which threatens to create an energy crisis over the winter.

Business confidence in Germany, the largest economy in the region, has declined in October. ING economist Carsten Brzeski said that, according to Barrons, a recession in Germany seems inevitable.

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