🇪🇺European Weekly - ECB hikes while ENVI catches fire over Nature Restoration Law
ECB expected to continue rate hikes, AI act process reaches final stage, German climate change commitment challenges, and Pascal Canfin’s ENVI catches fire over Nature Restoration Law
The European Weekly is your weekly update on major events in European politics, giving paid supporters of The French Dispatch a quick and easy summary of this week’s big stories!
This week
📈ECB expected to continue rate hikes
🤖AI act process reaches final stage
🇩🇪German climate change commitment challenges
💦Canfin’s ENVI catches fire over Nature Restoration Law
📈ECB expected to continue rate hikes
The European Central Bank (ECB) has raised the cost of borrowing in the eurozone to the highest level in 22 years. This was the ECB's eighth consecutive interest rate hike, taking the rate to 3.5%, the highest since 2001.
The decision comes at a time of persistently high inflation, with the ECB pledging more interest rate hikes next month and likely beyond. With the Russian invasion of Ukraine being the principal cause of the rapid increase in inflation and no end in sight, all financial actors are looking for a way to best manage the ongoing cost-of-living crisis.
In addition to raising interest rates, the ECB also shelved any lingering stimulus from the crisis. Core inflation forecasts were also revised.
ECB President Christine Lagarde said another rate hike is likely in July, with the ECB now expecting inflation to remain above its 2% target until the end of 2025:
“Barring a material change to our baseline, it is very likely the case that we will continue to increase rates in July… Are we done? Have we finished the journey? No. We’re not at our destination. Do we still have ground to cover? Yes, we still have ground to cover.”