It raises the average inflation for this year by two tenths, to 5.6%, and cuts the GDP forecast for this year and the next to 0.7% and 1.0%.

The Governing Council of the European Central Bank (ECB) has decided to raise interest rates by 25 basis points, so that the reference rate for its refinancing operations will be 4.50%, while the deposit rate will reach 4% and that of the loan facility 4.75%.

With this tenth consecutive rise in the price of money, which has reached its highest level in more than 20 years, the ECB continues with the tightening of its monetary policy, although it has pointed out that rates may have peaked.

“Today’s rate hike reflects the Governing Council’s assessment of the inflation outlook in light of new economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission,” notes the ECB in a statement.

On the other hand, the ECB has stated that interest rates “have reached levels that, if maintained for a sufficiently long time,” will contribute “substantially” to returning inflation to around 2%.

With the quarter-point increase announced this Thursday by the ECB, in line with the one adopted in July, the ‘Guardian of the euro’ has raised the price of money by 450 basis points during the current cycle of increases, which began in July of last year.

The Governing Council of the ECB has pointed out that the previous increases in interest rates “continue to be transmitted strongly” and financing conditions have tightened again and are increasingly slowing down demand, “which is an important factor for inflation returns to the target.”

Likewise, the organization led by Christine Lagarde has predicted that average inflation in 2023 will be 5.6%, to moderate to 3.2% and 2.1% in 2024 and 2025, respectively. This represents an upward revision of two tenths for this year and the next, which is justified by energy prices, but it is a downward correction of one tenth for 2025.

The underlying variable, which excludes energy and food prices from its calculation given their greater volatility, has also been revised “slightly downwards”, to remain at 5.1% this year, at 2.9% in 2024 and 2.2% in 2025.

For its part, the ECB has forecast that the gross domestic product (GDP) of the eurozone will expand by 0.7% this year, 1% next year, and that an acceleration will be recorded to 1.5% by 2025. These figures imply a “considerable” downward correction (two tenths less in the case of 2023, half a point in 2024 and one tenth in 2025) that the bank justifies in the impact of restrictive monetary policy on domestic demand and the weakening of international trade.


The ECB’s decision comes after the euro zone’s annual inflation rate slowed in July to 5.3%, two tenths below the price increase registered in June and its lowest level since January 2022. Excluding the impact of energy and food, alcohol and tobacco from the calculation, the underlying rate remained stable at 5.5%.

In addition, a week ago Eurostat reported that GDP growth in the euro zone registered a contraction of 0.1% in the second quarter of 2023, identical to that of the first tranche of the year.