ECB Hikes Interest Rates Amid Economic Risks

European Central Bank (ECB) President Christine Lagarde announced that the ECB has raised interest rates by 25 basis points, bringing the deposit rate to 2.50 per cent.

Lagarde emphasized that there are upside risks to inflation and downside risks to growth, citing strong performance in the manufacturing sector and increased government spending on defense and infrastructure as contributing factors.

The ECB has created three scenarios for the evolution of the energy shock: a favourable scenario, an adverse scenario, and a severe scenario. The new scenarios will be published by tomorrow or in the coming days and show how they have evolved between June and September.

Lagarde also highlighted the importance of creating a Capital Markets Union and passing legislation on the digital euro as soon as possible. She stated that the digital euro is necessary to preserve European sovereignty and maintain control over the infrastructure through which payments are made.