ECB, rates up by 0.25%: BTPs, mortgages and loans, price increases and consequences for households and businesses

ECB, new rate hike: now the cost of money at 3.75%

The verdict of the ECB complies with the forecasts of the last few weeks and confirms a 25 cent increase in interest rates in the euro area, bringing the reference rate to 3.75%. This is the seventh consecutive rise in 10 months, which began last July, an unprecedented dynamic since the existence of the single European currency. The cost of borrowing has reached levels not seen since 2008. Just a day earlier, the Fed also approved a similar decision, bringing the range of interest rates in the United States to a maximum of 5-5.25%. Even if the president Christine Lagarde explained that the ECB is an independent central bank. It is obvious that the US economy has spillover effects around the world, given its size, the depth of its financial markets. But we have a goal and more ground to cover. Whatever the Fed’s decision in the coming weeks, months, we will be nailed to our target and, of course, we will take into account the variables. From 10 May, therefore, in the euro area the main and marginal refinancing operations and those on deposits with the central bank will be raised to 3.75%, 4.00% and 3.25% respectively.
We are aware of the problems that mortgage borrowers are having, explained the president of the ECB, Christine Lagarde, families are suffering from the hikes and refunds which become more expensive. Unfortunately it is not something we can alleviate – he added – because our task is price stability and to reduce inflation there is the interest rate tool that we must use. Some countries, she explained, are taking special measures such as moratoriums and postponements, but the best we can do is tame inflation as quickly as possible so that high rates are no longer needed.

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05 May 2023

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