27 July 2023
In its attempt to curb painfully high inflation, the European Central Bank (ECB) raised interest rates for the ninth consecutive time. ECB President Christine Lagarde indicated the possibility of more hikes despite increasing fears of recession. This relentless drive to control inflation, coupled with rising energy prices and supply chain disruptions, is dealing a double blow to households and businesses. Higher rates make loans for homes, cars, and business expansions more expensive. These interest rate hikes, while designed to decrease spending and reduce prices, are causing a significant drag on economic growth. The eurozone is already experiencing consecutive quarters of contraction, and the continued rate hikes might worsen the situation.