ECB raised its key interest rates by an unprecedented 75 basis points to combat inflation

On Thursday, the European Central Bank increased its benchmark interest rates by an extraordinary 75 basis points and hinted at further increases. The value of household savings might be eroded by a rapid price increase, which could also start a difficult-to-stop wage-price cycle.

In December and October, more changes are expected. For weeks, the euro has been stuck at parity with the dollar, not far from a two-decade low reached earlier this month.

Additionally, being cautious runs the danger of weakening the euro and increasing inflation through more expensive energy imports. In addition to the fact that the ECB’s latest predictions indicate significantly weaker growth in the upcoming years, several officials are now openly discussing a recession.