The European Central Bank raised interest rates by another 25 basis points during its June meeting, bringing the rate on main refinancing operations to 4%, the highest level since the 2008 financial crisis, and the rate on the deposit facility to a 22-year high of 3.5%. This marked the eighth consecutive rate hike, even though the bloc entered a recession at the beginning of 2023, and as both the headline and core inflation rates remain significantly above the ECB’s target of 2%. The central bank has also revised its inflation forecasts upwards and slightly reduced its growth projections, particularly for this year and the following year. Meanwhile, during a news conference, President Lagarde stated that the ECB had more ground to cover and would likely continue raising rates in July. ECB officials have already implemented an unprecedented 400 basis point increase in rates over the past year, marking the fastest tightening pace in the history of the bank.
