European Central Bank Raises Rates for the First Time in 11 Years

cryptonews.com:

On Thursday, the European Central Bank (ECB) raised interest rates in the eurozone for the first time in 11 years, as high and rising inflation becomes central bankers’ primary concern. (This is a developing story and is being constantly updated.)

The 50 basis points rate hike is higher than analysts had expected, and marks a departure from the zero-interest rate environment the EU has been in since 2016.

The general consensus has been that the ECB would raise rates by 25-basis points, but a 50-point hike has in recent days been seen as increasingly likely due to soaring consumer prices in the eurozone.

"The Governing Council judged that it is appropriate to take a larger first step on its policy rate normalization path than signaled at its previous meeting," the ECB said.

ECB interest rate ahead of Thursday’s hike:

Commenting ahead of the rate hike, analysts at Deutsche Bank said in a note to clients cited by CNBC that unpublished inflation expectations data may have made ECB officials worried. As a result, a 50-basis point hike has been on the table recently, they wrote.

Moreover, the analysts also pointed to the so-called anti fragmentation instrument that ECB President Christine Lagarde has been focused on recently, saying a 50-point hike would help in negotiating the details of such a tool.

The anti-fragmentation instrument was also pointed to by others, with Dirk Schumacher of financial researcher Natixis writing in a note that Lagarde is likely to stress the “temporary nature” of such an instrument.

“[…] she will also underline the ECB’s determination to secure the integrity of the monetary union, thereby trying to evoke a ‘whatever it takes’ spirit,” Schumacher wrote, adding that the fine line Lagarde needs to walk