The European Central Bank (ECB) announced that its March 2023 interest rate decision was to increase by 50 basis points.
The US’s sharp interest rate policy caused the banks to have troubled days. In these days when liquidity problems were discussed and banks were collapsing, it was also a matter of curiosity what the interest rate decisions on the European side would be. In global markets where banks are bankrupt and recession concerns are dominant, interest rate increases are expected to slow down and inflation rates are expected to decline. In this context, the ECB made a statement regarding the increase of 50 basis points in its March 2023 interest rate decision.
European Central Bank Announces March Interest Rate Decision
A decrease in the direction of expectations in the latest inflation data of the USA and the signals that it will slow down the interest rate increase turned the eyes to the European interest rate decision.
The European Central Bank (ECB) set its March 2023 interest rate decision as 50 basis points increase, in light of the 50 basis point increase in expectations. With this interest rate decision, the current interest rate policy of the ECB became 3.5 percent.
The ECB made the following statements on the subject;
Inflation is expected to remain very high for a very long time. Therefore, the Governing Council has decided today to increase the ECB’s three core interest rates by 50 basis points, in line with its determination to return inflation to the medium-term target of 2% in a timely manner. The increasing level of uncertainty reinforces the importance of a data-driven approach in the Governing Council’s policy rate decisions; This approach will be determined by the evaluations of the inflation outlook, the fundamental dynamics of inflation and the strength of the monetary policy transmission in the light of incoming economic and financial data.
Aiming to bring inflation down to 2 percent, the ECB underlined that it closely monitors current market tensions and processes. Addressing the recent liquidity crunch, the ECB said, “The policy toolkit is fully equipped to provide liquidity support to the euro area financial system, if needed, and to maintain the smooth transmission of monetary policy.” said.
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