Our monetary policy statement at a glance - July 2022
What did we decide?
We raised interest rates by 0.5 percentage points
This is a further step in normalising our monetary policy. More rate hikes will come. They will depend on how we see the economy and inflation developing. The rate increases will help bring inflation back to our 2% target.
We agreed on a new instrument to make sure that our policy smoothly reaches all of the euro area
It will be part of our toolkit and can be activated to fend off financial market disorder that could seriously disrupt the way our monetary policy reaches people and businesses across euro area countries.
What is going on in the economy?
Inflation will stay high in the near term
Very high energy prices are still the main reason for this. But supply bottlenecks, high demand and a lower exchange rate are also pushing up inflation. Prices are going up in many parts of the economy.
The economy is growing more slowly…
This is because of high inflation, greater uncertainty and the problems that firms are facing with getting supplies. These factors significantly cloud the outlook for our economy for this year and beyond.
… but the effects are being cushioned because people are still spending
The economy is reopening and people are travelling again. A record number of people have jobs and they can use the savings built up during the pandemic. Government policies are also helping.
Borrowing is getting more expensive for firms and households
Interest rates on loans are gradually going up, in particular for households. Banks are also more cautious when giving loans because their customers face greater risks.