China News Service July 21 European Central Bank 1 hike rate for the first time in 211, raising three key interest rates by 50 basis points.
On July 21, local time, the official website of the European Central Bank issued a press release announcing that from July 27, 2022, the main refinancing interest rates, marginal loan interest rates, and deposit convenience rates will be raised to 0.50%, 0.75% and 0.00% respectively. This is the first rate hike in euro zone since July 2011.
The European Central Bank said that further normalization of interest rates will be appropriate at the upcoming meeting, and will decide to raise interest rates "sequentially" and the future policy interest rate path will continue to depend on the data.
The ECB pointed out that the flexibility of reinvesting the redemption of the Emergency Anti-epidemic Bond Purchase Program (PEPP) portfolio expires, remains the first line of defense against the risks of the pandemic-related transmission mechanism; the ECB intends to reinvest the maturity of the principal purchased under the plan until at least the end of 2024.
As the Ukrainian crisis escalates and the United States begins to raise interest rates, the exchange rate of euro against the US dollar has been falling all the way, falling to parity level on July 12. Since then, it has briefly broken through this important psychological barrier many times, constantly setting new lows in 20 years. The background that cannot be ignored is that the eurozone is facing severe inflation challenges.
According to data released by the European Statistics Office on July 19, the final value of the euro zone's reconciled CPI in June rose 8.6% year-on-year, continuing to hit a record high, with the previous value of 8.1%. In addition, the euro zone's CPI rose 0.8% month-on-month in June, flat at expectations and initial values. Excluding food and energy with high volatility, the final value of the eurozone core reconciliation CPI rose 3.7% in June, flat at expectations and initial values, with an increase of 3.8% in May.
At the same time, many countries have also accelerated their rate hikes. Federal has raised interest rates three times 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%; on July 13, the Bank of Canada announced a one-time rate hike of 100 basis points, setting the largest single interest rate hike since August 1998; Bank of England has raised interest rates for five consecutive times and will raise the benchmark interest rate to 1.25%.
After the European Central Bank announced a rate hike, the euro against the US dollar rose rapidly in the short term by nearly 50 points, as of press time, at 1.0256. European stocks rebounded further, with the French CAC40 index rising 0.36%, while the Italian FTSE MIB index narrowing to around 0.5%, after falling more than 2%.
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(China News Service APP)
