According to Reuters, the European Central Bank plans to raise interest rates for the seventh consecutive time at the meeting of the Board of Governors, which will be held on Thursday. The purpose of the rate hike is to fight rising inflation, which still remains above the target level of 2%. There is a possibility that the rate will be raised by 25 basis points, which will be a slowdown after the last three increases of 50 basis points. However, most members of the Board of Governors, who lean toward tight monetary policy, may call for a larger increase. At the same time, the "doves", who are inclined towards loose monetary policy, may express their disagreement. A possible compromise could be to stop reinvesting the maturing debt bought under the ECB's asset purchase program. According to most economists, the rate will be raised, but by a smaller amount than in the past. The rate is expected to peak around 3.75% in September. Some economic indicators, such as low growth in the eurozone economy and reduced demand for loans, may be taken into account when making a final decision.
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