As it looks now, interest rates will rise again by that percentage in March, the central bank has already announced. This is necessary to curb inflation, which has risen sharply since the outbreak of war in Ukraine.
With their intervention, the politicians in Frankfurt are repeating the interest rate hike of December. At that time, the ECB also raised interest rates by half a percentage point. Three quarters of a percentage point was added to the previous two interest rate decisions.
Slow down
The idea behind interest rate hikes is that loans will then become more expensive. People and businesses will end up spending less money. By doing this, the ECB hopes to curb demand in the economy and ensure that prices don’t go up so fast.
For consumers, the higher interest rate is evident, for example, when taking out a mortgage. Due to the ECB’s higher interest rates, banks like ING and ABN AMRO can also slowly raise their savings rates.