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The European Central Bank leaves its key interest rate unchanged at 4.5%.

The European Central Bank leaves its key interest rate unchanged at 4.5%.

Central Bank Information Box and Key Interest Rate

central bank

Central banks – also central banks or central banks – are State banks and “ordinary” commercial banks..

the European Central Bank (ECB) It is the central bank of the 19 European Union countries in which the euro is used. Its headquarters are located in Frankfurt am Main.

The most important task of the European Central Bank is to ensure that… Prices are stable in the Eurozone stay or Inflation is low It remains predictable, with the goal being an inflation rate of 2%.

In cooperation with eurozone countries, the European Central Bank also coordinates the production and issuance of euro banknotes.

Central banks can control the economic development of a country or countries with certain tools.

What is important here, among other things Interest rate policy – This includes measures through which central banks can influence the general level of interest rates The terms under which banks lend their money.

Prime interest rate

identification: Key interest rates refer to the conditions under which credit institutions can borrow money from central and central banks.

With the help of the key interest rate, central banks can react to economic conditions, for example Curb inflation Or that To stimulate economic growth.

The level of the key interest rate affects interest rates on construction, loans and savings. In simple words: Low interest rates It leads to increased lending and then increases it consumption. The result : Inflation is rising.

High interest rates However, it will be more than that rescued And I spent less money. Although this slows economic growth, But at the same time it also reduces inflation.

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In July 2022, the European Central Bank raised its key interest rate from 0 to 0.5% for the first time in eleven years. Since then, the central bank has announced nine more interest rate increases.