DECRYPTION – Christine Lagarde and her Frankfurt colleagues opted for an aggressive rate hike of 0.5 points.
Historical. The European Central Bank (ECB) raised its key rate from -0.5% to 0%. This is the end of the period of negative rates, which began in 2014, and the first increase in eleven years. The last time it had raised its rates, in 2011, it precipitated a recession in the euro zone and it had to be reversed the following year.
It is therefore with great caution that the major European fundraisers have matured this decision. Too? Within the Board of Governors, the most “hawks” were impatient with the slow reaction of the Central Bank to galloping inflation (8.6% last month). Across the Channel, the Bank of England has raised its rates five times in the past six months. The US Fed embarked on a bullish cycle with leaps of 0.75 points – we are even talking about 1 point – which should bring its rates to around 3.5% at the end of the year.
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In Europe, Christine Lagarde had announced in advance on June 9 a first increase, this Thursday…
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