Between inflation and recession // The ECB began to tighten monetary policy


The European Central Bank (ECB) raised key rates for the first time in 11 years – and immediately by 0.5 percentage points, which brought the deposit rate out of the negative zone. The reason for the tightening of monetary policy, which was twice as sharp as expected, was the continued rise in inflation in the eurozone – in June it increased to 8.6%. Previously, the ECB had long refrained from raising rates due to the debt crisis in the euro area, low inflation and the pandemic that was depressing the economy. Further tightening of the ECB’s policy will depend on the state of the economy in the euro area – while the regulator notes only a decrease in business activity, but does not expect a recession in the currency bloc either this or next year. Experts, however, believe that the period of rate hikes will not be long. .

Leave a Reply