At 13:45 CEC time on July 21, the European Central Bank officially announced a 50 basis point rate hike after holding a monetary policy meeting, which is also the first rate hike in the euro zone in more than ten years since July 2011.

Central European Time At 13:45 on July 21, European Central Bank officially announced the interest rate hike 250 basis points after holding the monetary policy meeting. This is also the first interest rate hike for euro zone since more than ten years since July 2011.

and Fed differently determines three key interest rates at each monetary policy meeting, namely deposit mechanism interest rate (DF: deposit facility rate), main refinancing operations and marginal lending rate (MLF: marginal lending facility rate).

refinancing rate is the interest rate for commercial banks to raise funds from the European Central Bank for one week. The marginal lending rate is the overnight interest rate when commercial banks borrow from the European Central Bank with collateral. The deposit mechanism interest rate is the interest rate obtained by commercial banks to the European Central Bank overnight deposits.

Because the deposit mechanism interest rate is directly linked to the fixed deposit rate of ordinary residents, and the interest rate has remained negative for a long time since June 2014, major European commercial banks have had to collect account management fee or punitive interest from depositors in the past eight years, and the ECB's negative interest rate policy is also famous.

At this monetary policy meeting, the European Central Bank decided to increase the deposit mechanism interest rate by 50 basis points to 0%, the marginal lending interest rate by 50 basis points to 0.75%, and the main refinancing interest rate by 50 basis points to 0.5%.

The European Central Bank officially opened the interest rate hike cycle did not surprise the market.

As early as May 23, ECB President Lagarde published a signed article on the ECB official website with the theme of "The Path to Normalization of Monetary Policy" and determined the basic route to gradually hike interest rates through two monetary policy meetings held in July and September to exit the era of negative interest rates.

At the last monetary policy meeting on June 10, although Lagarde steadily rejected the option of early interest rate hikes, it clearly stated that the ECB will choose a specific interest rate hike of 25 basis points twice on July 21 and September 8, and retain the option of adopting a 50 basis point interest rate hikes at the September monetary policy meeting based on inflation.

However, the inability to peak and the continued deterioration of inflation figures and other international central bank rapid rate hikes obviously broke Lagarde's interest rate hike plan.

Considering that Russia may take advantage of the "North Stream 1" natural gas pipeline maintenance on July 11, it may face the energy crisis of euro zone, because the strong coupling characteristics of the power market and natural gas have recorded a recent high in spot electricity prices in July. This also makes the inflationary pressure in the euro zone in July even more enormous.

On the other hand, due to concerns about the recession of global economy , the Dutch TTF benchmark natural gas futures price has fallen for three consecutive weeks. The package of measures such as cheap bus monthly passes and fuel subsidies launched by Germany, Italy and other countries is expected to ease inflation to a certain extent.

In addition to the inflationary pressure within the euro zone, other major global economies have entered a cycle of interest rate hikes one after another, which has forced the European Central Bank to take more decisive actions.

The Federal Reserve has raised interest rates three times in a row this year with a range of 25 basis points, 50 basis points and 75 basis points. The current federal funds rate range has risen to 1.5%-1.75%. The intensive pace of interest rate hikes also means that the United States is in the most radical interest rate hike cycle since the 1980s. On July 13, the Bank of Canada announced a one-time rate hike of 100 basis points, instead of the 75 basis points expected by the market, and adjusted the policy interest rate to 2.5%. Bank of England has raised interest rates for five consecutive times and will raise the benchmark interest rate to 1.25%. The latest resolution to raise interest rates was formulated on June 16. On July 19, Bank of England Governor Bailey said the bank will consider raising interest rates by another 50 basis points in August.

Currently, among the major economies in the world, only one of the long-term implementation of the yield curve control policy, is , which still maintains the negative interest rate of .

Due to the expansion of the basic interest rate spread of in the two major economies in Europe and the United States, and due to concerns about the outbreak of the energy crisis and the economic recession of EU , the euro fell to parity against the US dollar on July 14, which is also the lowest exchange rate in the euro in 20 years relative to the US dollar. However, after being boosted by news that the ECB would raise interest rates beyond expectations, the euro rebounded again this week to 1 euro against $1.02.

In addition to announcing the official opening of the interest rate hike cycle, the ECB has also launched a new interest rate spread control tool, the so-called anti-fragmentation tool: the transmission protection mechanism (TPI: Transmission Protection Instrument) in its monetary policy resolution. The ECB believes that TPI is an important tool to ensure the smooth transmission of monetary policy among member states and ensure policy unity.

In the environment where major economies around the world tighten monetary policies, the yield on the bonds of southern European countries represented by Italy has risen rapidly, and gradually widens the gap with the yields of the bonds of Nordic countries represented by Germany. In the past year, the 10-year treasury bond yield of Germany and Italy has expanded from 100 basis points to 220 basis points.

Currently, Italy's debt accounts for about 150% of its GDP. Compared with the four "European pig countries" during the European debt crisis, Portugal, Ireland, Greece, and Spain during the European debt crisis, Italy's economic growth in the past decade has fallen to the bottom of the five European pig countries, and the scale of the country's government debt exceeds the total of the other four countries.

's soaring lending rates may lead to a debt crisis in Italy, and even pull the euro zone into the European debt crisis 2.0.

According to the European Central Bank's practice, the bank's board of directors will hold monetary policy meetings every eight weeks. Currently, the market generally expects the European Central Bank to raise interest rates by 50 basis points on September 8.