The Governing Council of the European Central Bank (ECB) has decided to raise interest rates by 25 basis points, as expected by the market consensus, so that the reference rate for its refinancing operations will be at 3, 75%, while the deposit rate will reach 3.25% and the loan facility will reach 4%.

With this seventh consecutive increase in the price of money, which has reached its highest level since October 2008, the ECB continues to tighten its monetary policy, albeit for the first time since the current cycle of increases began, in July 2022, has reduced the intensity of the rate hike.

The ECB’s decision comes just one day after the Federal Open Market Committee (FOMC) of the United States Federal Reserve (Fed) decided to raise the interest rate by 25 basis points, to a target range of between 5% and 5.25%, also leaving open the possibility of a pause in the upward path of US monetary policy after the ten consecutive hikes that put the price of money in the US at maximums 16 years old.

On his side, with the quarter-point rise announced this Thursday by the ECB and after the increases of 50 basis points in March and February 2023 and also in December 2022, as well as the two increases of 75 basis points undertaken In the October and September meetings of last year, which followed the initial rise of half a percentage point in July 2022, the ECB has raised the price of money by 375 basis points during the current cycle of increases.

The year-on-year inflation rate in the euro area stood at 7% in April, which implies a rise of one tenth compared to the data for March, while the underlying rate, which excludes the effect of energy and food, eased for the first time time in ten months, standing at 5.6%, one tenth less than the previous month.

Likewise, according to Eurostat, the gross domestic product (GDP) of the euro zone grew by 0.1% in the first quarter of 2023, the first with twenty members of the single currency, after the stagnation registered in the three previous months in the an equivalent comparison with the sum of Croatia, while the unemployment rate in the euro area stood at 6.5% in March, one tenth less than the previous month and its lowest level in the entire historical series.

On the other hand, the ECB’s survey of bank loans revealed this week that banks in the euro area substantially tightened their lending conditions in the first quarter, even beyond the expectations of the entities themselves, as a result of greater risk perception in a context marked by rising interest rates and financial turmoil.