(Reuters) In light of record inflation in the eurozone, insiders say the European Central Bank (ECB) is discussing a significant rate hike. According to informed sources, according to Reuters, a possible increase of half a point will be discussed at Thursday’s meeting, in addition to an increase of a quarter of a point. In fact, Christine Lagarde, President of the European Central Bank, promised only a quarter-percentage point increase and perhaps an even larger increase for the month of September alone.
The European Central Bank declined to comment on the information when asked. The euro rose to $1.0230, its highest level in nearly two weeks, on signs that interest rates could rise sharply.
Among the leading central banks, the European Central Bank is far behind when it comes to raising interest rates. In the US, the Federal Reserve reacted early to the persistent rise in inflation by raising interest rates. In June, the Federal Reserve raised its key interest rate by 0.75%, the largest rate increase since 1994. On the other hand, the European Central Bank still maintains its key rate at a record low of 0.0%, which it has been since March 2016. The deposit rate has also been in the red since 2014, which means a penalty interest for banks if they stop the central bank’s excess liquidity. The rate has been at -0.5% since fall 2019.
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