ECB raises interest rates by 25 bps

May 04, 2023 (MLN): European Central Bank (ECB) on Thursday increased the benchmark refinancing interest rate by 25 basis points to 3.50%-3.75%.

This hike came largely in line with the market’s expectations, wherein the market participants were expecting a 25 bps hike, following yesterday's U.S. FOMC decision.

The outlook for inflation continues to remain too elevated, future rate decisions will be restrictive enough to bring inflation under control, ECB stated.

Following this decision, Euro dipped slightly by 0.16% to $1.1042.

ECB president Christine Lagard stated in the press conference that we are not pausing, that is very clear.

We know that we have more ground to cover, she added.

Lagarde expressed that the risks to inflation still remain too elevated, and that financial conditions were still not sufficiently tight.

Furthermore, she used "future policy decisions" in the plural, which might possibly be suggesting more than one rate hike.

This came as a surprise after yesterday's U.S. meeting, with fed hinting a pause.

Following the press conference, STOXX 600, Europe stock index, fell 0.41%.

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