Market history · Central banks ·
The ECB raises rates by half a point and ends negative rates
On 21 July 2022 the European Central Bank raised its three key interest rates by 50 basis points, its first increase in eleven years and larger than the quarter-point it had previously signalled. The move took the deposit rate out of negative territory, where it had been since 2014.
The ECB was responding to euro-area inflation well above its 2% target. It also introduced a new tool, the Transmission Protection Instrument, intended to counter unwarranted widening in the borrowing costs of weaker euro members.
The end of negative rates marked the close of an era for European savers and for bond investors who had become used to yields below zero.
The takeaway
After years of near-zero rates, the first rise was larger than most expected. The path of policy is always uncertain.
Sources
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