In a much-anticipated decision, the European Central Bank (ECB) has announced that it will be leaving interest rates unchanged at their current record high. This marks the end of a 15-month period of consecutive interest rate hikes. However, despite this decision, the bank is still actively seeking ways to combat inflation, and one option being considered is a potential acceleration in the reduction of its large portfolio of government debt.
The decision to keep interest rates unchanged comes as no surprise to many economists, who have been anticipating a pause in the bank’s rate hiking cycle. This period of stability will provide a much-needed breather for businesses and consumers alike, who have been feeling the impact of consecutive rate hikes. However, the ECB is not resting on its laurels and is exploring alternative strategies to tackle persistent inflation concerns. One such strategy being discussed is a faster reduction of the bank’s extensive collection of government debt. By shrinking its debt portfolio, the ECB hopes to curb inflation and stabilize the economy in the long run.
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