The ECB raises interest rates 75 points more, to 2%, its highest level since 2009

MADRID, 27 Oct.

The ECB raises interest rates 75 points more, to 2%, its highest level since 2009


The Governing Council of the European Central Bank (ECB) has decided to raise interest rates again by 75 basis points, so that the interest rate for its refinancing operations will be 2%, while the deposit rate will reach 1.50% and the loan facility, 2.25%.

In this way, the price of money has reached its highest level since January 2009, when the ECB began a path of stimulus at the monetary level that was briefly interrupted in 2011, when they decided to raise the price of money again for some months.

The Governing Council of the ECB has underlined that with this third consecutive rise in rates it has achieved "considerable progress in reversing the accommodative stance of monetary policy". Despite this, the monetary authority still plans to continue raising rates to return inflation to the 2% target.

The issuing institution has maintained its opinion that inflation "remains excessively high." In addition, it has justified that its monetary policy of raising rates "is aimed at reducing support for demand and providing protection against the risk of a persistent upward shift in inflation expectations."

On the other hand, the ECB plans to recalibrate the terms and conditions of its third program of targeted long-term refinancing operations (TLTRO III) to ensure that it is consistent with the monetary normalization process. The ECB will offer banks to adjust the applicable interest rates, so that from November 23 the average interest rate of the ECB applicable during the period will be applied. In this sense, it will offer new dates to the banks to repay the borrowed amounts in advance.

Likewise, in order to align the remuneration of the minimum reserves required by the BCE from credit institutions with the current state of money market conditions, the BCE has set the remuneration of said reserves at the deposit rate.

The ECB has recalled that the principal of the overdue debt that has been purchased under the pandemic purchase program (PEPP) will continue to be reinvested until the end of 2024. On its side, the reinvestments of the public assets (APP, for its acronym in English) will be held for an "extended" period of time since the ECB began raising rates (July).


The gross domestic product (GDP) of the euro zone registered a quarter-on-quarter increase of 0.8% in the second quarter of 2022, one tenth more than in the previous three months, according to the latest data published by Eurostat, the office of community statistics.

On the other hand, prices registered an inflation of 9.9% in September, eight tenths more than in the previous month, due to the increase in energy and food prices, marking their maximum since there are records historical.

Likewise, the interannual rate of underlying inflation of the countries that have adopted the euro as their common currency, which is the result of excluding from the calculation the evolution of the prices of energy, fresh food, alcohol and tobacco, rose by five tenths, up to 4.8%.

With regard to unemployment, the euro zone August rate, the latest available, was unchanged at 6.6%. In the EU as a whole, unemployment stood at 6%, also the same figure as the previous month.

The next meeting of the Governing Council of the body responsible for the monetary policy of the eurozone will be held on December 15, 2022.