%20(3).png){kind=small}
![TFD [LOGO] (10).png](https://static.wixstatic.com/media/bea252_c1775b2fb69c4411abe5f0d27e15b130~mv2.png/v1/crop/x_150,y_143,w_1221,h_1193/fill/w_179,h_176,al_c,q_85,usm_0.66_1.00_0.01,enc_avif,quality_auto/TFD%20%5BLOGO%5D%20(10).png)
ECB Follows Fed Lead, Raises Rates To Highest Level Since 2000
- By The Financial District
- Jul 27, 2023
- 2 min read
The European Central Bank (ECB) raised interest rates by a quarter of a percentage point Thursday, July 27, 2023, judging that inflation remains too high even as data points to a deepening economic downturn in the 20 countries that use the euro, Hanna Ziady reported for CNN.
Photo Insert: The ninth consecutive hike by the ECB followed another rate increase by the US Federal Reserve, which raised benchmark borrowing costs by a quarter of a percentage point Wednesday to their highest level in 22 years.
The move takes the benchmark rate in the euro area to 3.75%, the highest since October 2000. “Inflation continues to decline but is still expected to remain too high for too long,” the ECB said in a statement.
“The past rate increases continue to be transmitted forcefully: financing conditions have tightened again and are increasingly dampening demand, which is an important factor in bringing inflation back to target,” it added.
The central bank targets a headline inflation rate of 2%. The ninth consecutive hike by the ECB followed another rate increase by the US Federal Reserve, which raised benchmark borrowing costs by a quarter of a percentage point Wednesday to their highest level in 22 years.
US and European central bank officials remain concerned about consumer prices, although there is growing evidence that interest rate hikes are starting to tame inflation while also dampening economic activity.
Traders are convinced the Fed is done hiking, giving an 80% probability that no change will be enacted at its next meeting, according to the CME FedWatch Tool.
Market participants will be looking for clues on the future path of interest rates in Europe when ECB President Christine Lagarde addresses journalists at 8:45 a.m. ET. Recent evidence suggests the euro area may remain stuck in recession.
Demand for business loans fell to a record low in the second quarter, according to a survey published by the ECB Tuesday. The report also found that banks had tightened credit standards further across all loan categories.
