Today, the Governing Council of the European Central Bank decided to raise the three key ECB interest rates by 50 basis points and approved the Transmission Protection Instrument (TPI) in an effort to make sure inflation returns to its 2% target over the medium term.
The Governing Council decided to raise the three key ECB interest rates by 50 basis points. Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be increased to 0.50%, 0.75% and 0.00% respectively, with effect from 27 July 2022.
The ECB says the decision will support the return of inflation to its medium-term target by strengthening the anchoring of inflation expectations and by ensuring that demand conditions adjust to deliver its inflation target in the medium term.
Further rate hikes expected
According to the ECB’s announcement, further normalisation of interest rates will be appropriate at the upcoming council meetings. The frontloading today of the exit from negative interest rates allows the Governing Council to make a transition to a meeting-by-meeting approach to interest rate decisions. The Governing Council’s future policy rate path will continue to be data-dependent and will help to deliver on its 2% inflation target over the medium term. In the context of its policy normalisation, the Governing Council will evaluate options for remunerating excess liquidity holdings.
How will rising interest rates impact real estate investment activity? Find out during the expert panels of our annual CEE Property Forum in Vienna on 21 September.
