The European Central Bank Increasing Interest Rates to the Highest Level since 2009

The European Central Bank tightened monetary policy again and raised interest rates to the highest level in a decade for the third consecutive meeting.

The bank, which sets monetary policy for the 19 countries that use the EUR, raised the deposit rate by 75 basis points to 1.5%, which is a record rate since 2009. The refinancing rate also increased to 2%.

The Governing Council expects rates to rise further in the future to reduce inflation in time. Consumer prices rose 9.9% year-on-year in September, driven by higher energy and food prices. The target level of inflation in the Eurozone is 2%.

The ECB started raising rates relatively later than the US Federal Reserve, which has chosen a more aggressive policy. The pace has indeed accelerated with this decision, but the Fed still has higher rates, at the 3-3.25% mark.

The goal of the European Central Bank is to maintain balance so that rate increases do not affect economic growth. So far, it is not known how far this trend will continue, which gradually increases the risks of recession in Europe.