ECB Raises Interest Rates Amid High Inflation and Lowered Growth Forecasts

MARKET_WATCH Economy

In an unexpected move on Thursday, the European Central Bank (ECB) raised its key interest rates by 25 basis points, citing persistent inflationary pressures. The decision will come into effect from September 20, 2023. The ECB has increased the interest rate on the main refinancing operations, as well as the rates on the marginal lending facility and the deposit facility to 4.50%, 4.75%, and 4.00% respectively.

 

The ECB's decision comes as it lowers its growth forecasts and increases its inflation expectations for the Euro area. According to the ECB's latest macroeconomic projections, average inflation is expected to be 5.6% in 2023, followed by 3.2% in 2024, and finally cooling down to 2.1% in 2025. This represents an upward revision for 2023 and 2024 and a downward revision for 2025.

 

The central bank has also revised down the projected path for inflation excluding energy and food to an average of 5.1% in 2023, then decreasing to 2.9% in 2024, and further dropping to 2.2% in 2025.

 

In light of these developments, the ECB has significantly lowered its economic growth projections for the Euro area. The bank now expects the economy to expand by a mere 0.7% in 2023, improving slightly to 1.0% in 2024, and further to 1.5% in 2025.

 

This tightening of monetary policy is expected to impact domestic demand and the international trade environment negatively. The ECB noted that increasingly tighter financing conditions are dampening demand, which it sees as a crucial factor in bringing inflation back to its target of around 2%.

 

Despite these significant policy changes, the gold market did not react significantly to the ECB's latest decision. Spot gold against the euro last traded at €1,782.44 an ounce, up 0.24% on the day. In comparison, spot gold against the dollar remained roughly unchanged, last traded at $1,908.60 an ounce.

 

Source : Economy News by Investing.com / September 14, 2023

rayn.finance logo

Automata FRANCE SAS

240 rue Evariste Galois,

06410 Biot,

Sophia Antipolis

Automata Pay

65-66 Warwick House 4th

Floor, Queen Street, London

England, EC4R 1EB

Automata Pay Europe Ltd

3rd Floor Ormond Building,

31-36 Ormond Quay Upper,

Dublin 7, D07 Ee37

Automata ICO Ltd

Italian Branch

Via Archimede, 161,

00197 Roma

Italy

The purchase of digital assets is subject to a high market risk and price volatility. Changes in value can be significant and occur rapidly and without warning. Past performance is not a reliable indicator of future performance. The value of an investment and returns can fluctuate both up and down, and you may not recover the amount you invested. RISK WARNING

Automata ICO Limited has a branch in Italy with its registered office at Via Archimede, 161, Roma, Italy, and registered in Italy under number 96550860587 with the Organismo Agenti e Mediatori (OAM) as a Virtual Asset Service Provider (VASP).

Automata France SAS is a company registered in France with the company number 902 498 617. Automata FRANCE SAS is registered with the french Financial Market Authority, l’Autorité des marchés financiers (“AMF”), as a provider of Virtual Asset Service Provider under number E2023-087.

Automata Pay Europe Limited is a partner of Modulr Finance B.V., a company registered in the Netherlands with company number 81852401, which is authorised and regulated by the Dutch Central Bank (DNB) as an Electronic Money Institution (Firm Reference Number: R182870) for the issuance of electronic money and payment services. Your account and related payment services are provided by Modulr Finance B.V. Your funds will be held in one or more segregated accounts and safeguarded in line with the Financial Supervision Act.