On Thursday, the European Central Bank (ECB) continued its measures to try to bring inflation down to 2%, adding 25 basis points to its 3 interest rates. Earlier this week, the Fed made a similar decision.
The European Central Bank (ECB) raises interest rates
With soaring inflation in recent years, central banks around the world have been forced to review their monetary policies. It is therefore in this dynamic that the ECB announced on Thursday that it was raising its 3 key rates by 25 basis points.
In this way, the interest rate for the main refinancing operations goes to 3.75%, those of the marginal lending facility to 4%, and 3.25% for the deposit facility. These measures will take effect from May 10.
The purpose of these rate hikes is to bring inflation down to 2%while it was 7% in April in the euro zone:
Figure 1 — Consumer price inflation rate in the euro area
If the rate hikes have started to produce their effect, there is still a long way to go and the ECB indicates that these will be maintained as long as necessary :
“Future decisions by the Governing Council will ensure that policy rates are reduced to levels restrictive enough to allow inflation to return quickly to the medium-term objective of 2% and will be maintained at these levels for as long as necessary. »
In addition, Christine Lagarde, President of the ECB, specified in her speech informing about this rate hike that April food inflation was 13.6%. As for inflation excluding food and energy, it is 5.6%.
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Similar choices in the United States
Before the ECB, the Federal Reserve of the United States (Fed) had also chosen a rate hike on Wednesday. There too, the “fed funds rates” have seen an addition of 25 basis pointsas the consensus expected, bringing these rates to 5.25%:
Figure 2 — Fed interest rate
As the chart above shows, a policy of continuous rate hikes has been in effect for a year now, and the next decision is due on June 14.
For its part, the price of Bitcoin was not particularly affected by these various macro-economic news, and continues to evolve in its range of 27,000/30,000 dollars, to just over 29,000 dollars during the writing these lines.
👉 Also in the news — Bitcoin (BTC), the FED could pivot this summer!
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Sources: ECB, Trading Economics
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