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Essentials of Monetary Policy

The ECB Raises Rates Another 25 Basis Points, and There's More to Come

June 15, 2023
Hendrix Vachon
Principal Economist

Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be increased to 4.00%, 4.25% and 3.50% respectively.

May’s improved inflation print wasn’t enough to bring down expectations. ECB staff revised up their projections, especially for inflation excluding food and energy.

At the press conference, President Christine Lagarde reiterated that inflation remains too high, highlighting pressures from the services sector and wage increases.

Based on today's update, monetary tightening certainly isn't over. We were already pricing in another hike in July, and it now seems less likely the ECB will stop there.