The European Central Bank (ECB) raised interest rates by 50 basis points on Thursday despite turmoil in the banking sector. Preliminary data shows that headline inflation in Europe is still high, with consumer prices surging 8.5% in the 12 months to February.
- The ECB's deposit rate is now 3%, its highest level since 2008.
- The ECB's deposit rate had been negative for most of the past decade.
- ECB president Christine Lagarde said the bank is committed to fighting inflation amid concerns about the European financial sector.
- The ECB projects that inflation will average 5.3% in 2023, 2.9% in 2024, and 2.1% in 2025.
- The central bank noted that these projections were finalized before Credit Suisse's shares plunged and the recent collapse of two U.S. banks.
- Following
the implosion of Silicon Valley Bank (SVB) and Signature Bank last
week, Goldman Sachs said it now expects the Federal Reserve to raise interest rates by 25 basis points when it meets next week.
