rates in the euro area towards 3.75% – Corriere.it

According to analysts, today’s meeting of the Governing Council of the ECB will have a foregone conclusion. The European Central Bank, with a very high degree of probability, should in fact announce a new increase in interest rates in the euro area of ​​25 cents, bringing the cost of money from the current 3.5% to 3.75%.

If confirmed, it will be the seventh increase in rates since July last year, when the cost of money rose from zero to 0.5% and the long anomaly of negative interest rates on short-term bank deposits with the bank ended. central. In just 10 months, and after 2 consecutive increases of 75 cents in September and November 2022, the ride on the cost of money will therefore have brought eurozone rates back to that level of 3.75% dating back to October 2008, an era in which the downtrend predominated. Today the radically changed scenario and the difficulties that the ECB encounters in bringing inflation under control – with the target of 2% per annum – make it clear that today’s increase will not be the last. Just last Wednesday Eurostat, the EU statistical processing centre, announced that inflation in April in the eurozone recorded a 7% year-on-year rise (+8.3% in Italy, according to Istat data), in increase from the 6.9% trend in March. An increase that clashes with the tightening of monetary policy conditions decided in Frankfurt in recent months. In this scenario of inflation still out of control, analysts expect another increase in ECB rates of 25 basis points at the meeting on June 6th and another 25 basis points on July 27th, when rates should reach their maximum for the period at 4 .25%.

Today’s decision by the ECB to increase it by a quarter of a point will not be taken lightly. In fact, there are growing signs of a slowdown in economic activity and a tightening of credit to businesses. The ECB is also expected to announce the end of the reinvestments of the Asset Purchase Program (APPs) from the end of June, while it will continue to reinvest the proceeds from the redemptions of the Pandemic Emergency Purchase Program (PEPP).

The decision to raise rates will naturally have a direct effect on citizens’ living conditions. According to estimates by Facile.it, an increase of 25 cents of a point will cause a growth of 22 euros for newly stipulated variable-rate mortgages for an amount of 150 thousand euros. The payment amount of an adjustable rate mortgage increased by 52% from July of last year.