ECB raises interest rate to 3.20% in ongoing tightening campaign

The European Central Bank (ECB) has announced its decision to raise the interest rate to 3.20%, marking another step in its ongoing monetary policy tightening campaign. This move follows market expectations and reflects the ECB's focus on economic data to guide future rate decisions amidst uncertainties surrounding inflation and growth.

The new rates set by the ECB include a key deposit acceptance rate of 3.5%, a main refinancing rate of 4% (up from 3.75%), and a marginal lending facility rate of 4.25% (up from 4%). These changes will take effect from June 21, 2023. Economists and financial markets anticipate another rate hike, possibly in July, with expectations of the base rate peaking at 3.75%.

The focus now shifts to Christine Lagarde's press conference, where analysts and investors eagerly await insights into the ECB's future moves and the ultimate level at which borrowing costs will stabilize in order to achieve the Eurozone's 2% inflation target, currently standing at 61.1%.