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European Central Bank forecasts higher inflation

Berlin, Jun 15 (Prensa Latina) The European Central Bank (ECB) on Thursday forecast that inflation will continue to rise in the euro zone while predicting lower economic growth for the region.

Such a forecast points to data for 2023. According to the new figures, inflation will reach 5.4 percent this year, compared to 5.3 percent prediction in March.

Meanwhile, there will be a downward trend in inflation reaching three percent by 2024 and 2.2 by 2025, not far from the institution’s two percent target.

In turn, the Gross Domestic Product (GDP) should grow 0.9 percent this 2023, compared to the one previously expected, then 1.5 percent in 2024 and 1.6 in 2025.

The ECB on Thursday decided to increase its interest rates by a quarter point to four percent, a level not reached since having adopted the euro, as underlying inflation remains high.

Following the Governing Council meeting, the ECB reported that it also increased by 25 basis points the credit facility, at which it lends to banks in 24 hours up to 4.25 percent. In the meantime, ECB provides deposit facility, at which it remunerates banks for excess reserves in a day up to 3.50 percent.

The Bank explained that inflation declined, but it is expected to remain too high for too long.

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