ECB surprises markets with a 50bp rate hike

ECB + bridge

The European Central Bank announced its first interest rate increase since 2011 at its policy meeting today (July 21), by a greater margin than markets had expected. The ECB’s governing council decided to increase the key deposit rate by 50 basis points, to 0%, above the 25bp increase it seemed to forecast in June. 

The ECB also dropped forward guidance and unveiled a new tool aimed at reducing the “fragmentation risks” caused by diverging yields on eurozone country’s sovereign bonds.


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