Faced with galloping inflation, the European Central Bank raises its interest rates

Christine Lagarde, President of the European Central Bank (Illustration image).

REUTERS/Ralph Orlowski

Text by: RFI Follow

1 min

The European Central Bank raised its interest rates on Thursday by half a point, to reach a level not equaled since 2008. This fifth increase announced is still intended to fight against inflation by trying to restrict the money supply. available.

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While in the United States, inflation is down sharply, the phenomenon is much slower in the euro zone.

This forces central banks to tighten the monetary screw ever further. 

, the cycle of increases began last July.

This month, inflation in the euro zone fell for the third consecutive month to 8.5%.

This is more than expected, but it remains well above the target set by the central bank: 2% in the medium term.

This is also a sham improvement because " 

 " inflation, excluding energy and food, remained at 5.2%, recalled the President of the ECB, Christine The guard.

On the side of the Bank of England – which raises its rate to 4% – it is the same refrain and it is the tenth consecutive increase in rates decided by the monetary institute.

The situation is exacerbated in the United Kingdom, which is the only major world economy which could suffer a recession in 2023, according to the IMF, and where inflation exceeds 10%.

A recession stoked by a tight labor market, in particular due to Brexit, and shortages linked to the pandemic, as well as a surge in energy prices as in its European neighbors.

► Also to listen: Report France – Purchasing power: in the face of inflation, the French call on “system D”

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