• The European Central Bank (ECB) cited concerns about prolonged high inflation.
• Beginning on June 21, 2023, these prices new measures will apply.

On Thursday, the European Central Bank (ECB) announced a 25 basis point increase to its benchmark interest rate, which is one of three main rates set by the ECB. In light of the decision made by the bank’s Governing Council, the interest rates on the bank’s primary refinancing operations, marginal lending facility, and deposit facility will all be raised to 4.00%, 4.25%, and 3.50%, respectively.

Beginning on June 21, 2023, these prices will apply. This follows a downturn in the cryptocurrency market in response to the Federal Reserve’s comments on the possibility of a rate hike later in 2023. Unlike ECB, the Fed decided to pause the interest rate hike for now.

Fighting Prolonged Inflation

The European Central Bank (ECB) cited concerns about prolonged high inflation as the rationale for its decision to raise interest rates. Bitcoin’s price increased on Thursday after a 4.19 percent drop in the last 24 hours in response to the European Central Bank’s rate rise. Although the bears were able to take control yet again.

Positive reactions in the cryptocurrency market followed a similar move by the European Central Bank at its meeting in May of 2023. The European Central Bank’s Governing Council expects inflation to decline over the course of the next two years.

In a statement, the ECB Council said:

“According to the June macroeconomic projections, Eurosystem staff expect headline inflation to average 5.4% in 2023, 3.0% in 2024 and 2.2% in 2025. Indicators of underlying price pressures remain strong, although some show tentative signs of softening.”

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In order to attain its medium-term goal of reducing inflation to 2%, the ECB has said that it would adopt a sufficiently restrictive posture going ahead.​