Economic Buzz: ECB Raises Interest Rate For First Time In 11 Years

22 Jul 2022 , 08:39 AM

The European Central Bank raised its interest rates for the first time in over a decade on Thursday, by a bigger-than-expected 50 basis points, and unveiled an anti-fragmentation tool called the Transmission Protection Instrument, or TPI. ECB President Christine Lagarde had said in June that the bank would hike interest rates by 25 basis points in July and follow up with a similar, or bigger, move in September if the macroeconomic outlook deteriorated. The Governing Council judged that it is appropriate to take a larger first step on its policy rate normalization path than signaled at its previous meeting, the ECB said in a statement. This decision is based on the Governing Councils updated assessment of inflation risks and the reinforced support provided by the TPI for the effective transmission of monetary policy. The main refinancing rate was raised to 0.50 percent from zero and the deposit facility rate was hiked to zero from -0.50 percent. The marginal lending rate was lifted to 0.75 percent from 0.25 percent. Eurozone interest rates were last raised in July 2011. Powered by Commodity Insights