European Central Bank will raise rates for the first time since 2011

• The European Central Bank expects a 0.25 percent rise next month.
• Annual inflation in the eurozone’s 19 members hit an all-time high of 8.1 percent in May.
• Russia’s unlawful assault against Ukraine continues to wreak havoc on the European and global economies.

In order to combat record high inflation driven by the war in Ukraine, the European Central Bank (ECB) proposes to boost interest rates from historic lows. The ECB maintained rates steady today, but reiterated intentions to raise them when it meets again in July. It said today that it expects a 0.25 percent rise next month. The news comes after annual inflation in the eurozone’s 19 members hit an all-time high of 8.1 percent in May.

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“High inflation is a significant problem for all of us. “Over the medium term, the Governing Council will ensure that inflation returns to its objective of 2%,” the ECB stated.

In comparison to its March predictions, the European Central Bank has drastically reduced its eurozone growth prognosis. It now forecasts 2.8 percent annual real GDP growth in 2022 and 2.1 percent in 2023. It predicted that the economy will grow at 3.7 percent in 2022 and 2.8 percent in 2023 during its March meeting.

“Russia’s unlawful assault against Ukraine continues to wreak havoc on the European and global economies. It is disrupting commerce, causing material shortages, and contributing to the rise in energy and commodity prices. “These issues will continue to erode confidence and stifle growth, particularly in the short term,” the ECB stated. “Economic activity is projected to perk up again once the current challenges subside.”

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