ECB's Lagarde Says 'Inflation Remains Far Too High'

The ECB has increased interest rates by 75 basis points, marking the third consecutive major rate hike. This decision aims to combat high inflation, which reached 9.9% in the Euro area in September. Factors such as rising energy and food prices, supply bottlenecks, and post-pandemic demand recovery have contributed to inflation. The ECB is adjusting its monetary policy, including changes to the TLTRO 3 terms, to align with market conditions and ensure effective transmission of policy rate increases. Additionally, the remuneration of minimum reserves held by credit institutions will be set at the ECB deposit facility rate. Detailed press releases on these decisions are available on the ECB website.

What is the primary reason for the ECB's recent interest rate hikes?

• To increase consumer spending

• To achieve a 2% medium-term inflation target

• To support the housing market

• To decrease the value of the Euro

What factors have contributed to the recent rise in Euro area inflation?

• Decreasing energy prices

• Supply bottlenecks and post-pandemic demand recovery

• Increased government spending

• Lower food prices

What is the purpose of recalibrating the TLTRO 3 terms?

• To support small businesses

• To align with the broader monetary policy normalization process

• To decrease inflation rates immediately

• To increase bank profits

When will the adjusted interest rates for TLTRO 3 take effect?

• October 31, 2022

• December 15, 2022

• November 23, 2022

• January 1, 2023

What change is being made to the remuneration of minimum reserves?

• It will be set at the ECB deposit facility rate

• It will be linked to the inflation rate

• It will be increased by 10%

• It will be decreased to zero