The ECB raises key interest rates by 50 bps

Following today's meeting, the European Central Bank raised all three key interest rates by 50 basis points. The base interest rate on loans has been increased to 3%, the deposit rate to 2.5%, and the rate on margin loans to 3.25%.

ECB representatives noted that the governing council intends to continue raising rates at a steady pace and keep them at a level that significantly limits economic activity in order to achieve a return of inflation to the 2% target.

Due to the continuing inflationary pressure, the regulator plans to raise rates by another 50 bps at a meeting in March, and only then will it assess the further direction of monetary policy. In any case, the ECB's decisions mainly depend on the published macroeconomic indicators and are taken at each individual meeting.

In addition to the rate decision, the central bank also raised the issue of the terms of the balance sheet normalization program, which increased to almost 5 trillion euros after many years of asset repurchase. Details of the program will be published later on Thursday in a separate press release.

Back in December, ECB representatives announced that the portfolio of bonds purchased under the Asset Purchase Program (APP) will decrease by an average of 15 billion euros per month until the end of the second quarter of 2023. After that, the regulator will determine the further pace of its reduction.