DECRYPTION – A surprise rise of 0.5 points puts an end to the era of negative rates in force since 2014.
The European Central Bank (ECB) has been criticized enough for its slowness to react to inflation not to note an unexpected acceleration on Thursday 21 July. Its president, Christine Lagarde, had pre-announced, six weeks ago, a rate hike of 0.25 points, followed by another in September. The Board of Governors meeting on Thursday surprised everyone by finally deciding to raise rates by 0.5 points all at once, ending a seven-year experience of negative rates. The deposit rate at which the money placed by the banks at the ECB is remunerated therefore drops to zero.
The ECB thus joins the 80 central banks around the world which have raised their rates in recent months. “We felt that a larger first step towards interest rate normalization than indicated at the previous meeting was appropriate,” justified his boss. She cited in support of this decision the “upside risks” weighing on inflation, which reached 8.6% in June – more than four…
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