Finally!
The European Central Bank has decided to take a big step in interest rates - the largest in its history, apart from special cases from the early days.
Key interest rates will rise by 0.75 percentage points.
Christian Siedenbiedel
Editor in Business.
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Until recently, this was considered taboo: When the central bankers talked about their September meeting, they always meant a 0.5 percentage point hike with a possible “big” rate hike and a 0.25 percentage point hike with a “small” one.
However, the decision did not really come as a surprise.
Scattered statements from the Governing Council of the ECB had recently led a narrow majority of ECB observers to expect that this rate hike would come about.
Will inflation go away now?
Experience from Great Britain, for example, shows that in the current environment, inflation rates can continue to rise significantly even if interest rates are raised.
Nevertheless, the decision of the ECB is correct.
It is not your job to implement economic policy to avoid a recession in the euro area or to give highly indebted euro states a helping hand in order to protect them from the consequences of their own budgetary policy in the form of rising interest rates on bonds.
Its goal, on which it now has to concentrate fully, is price level stability.
Unfortunately, the central bank waited far too long to react to inflation, underestimating it and believing it to be temporary.
Now it can find itself in the awkward position of raising interest rates into a recession.
That hurts more, but shouldn't impress the central bankers.
Inflation is a scourge, and it affects everyone, not just the wealthy.
The longer you wait to fight it, the more difficult it often becomes.
The ECB is coming late – but hopefully not too late to get the price level development under control again as soon as possible.