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For the six years up to June , interest rates in the eurozone were zero, and the latest move by the ECB is at an accelerated pace, but it has been less aggressive on rate raising compared to other major central banks such as the US Federal Reserve and the Bank of England. The rate decision also shrugged off political opinion, with French President Emmanuel Macron recently expressing concern over higher rates reducing economic demand. Lagarde expected that food, energy, and commodity prices will keep inflation high in the eurozone, fanned by the unpredictability of the long-lasting war in Ukraine.
Stock market reaction was mixed, with the German DAX climbing by 0. While this may have staved off immediate fears of a recession, there remains concerns that a downturn is still on the way, as the hawkish monetary policy of the Federal Reserve looks set to continue. In the short term, US job losses are widely expected to be minimal, and consumer spending be robust despite the higher cost of living.
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