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“The probability of recession is now much more on the horizon”, unemployment could rise and there is “concern” about these threats, said Christine Lagarde, the president of the European Central Bank (ECB), yesterday, the day she announced a new large rise in key interest rates.
Yesterday, despite having uttered the word “recession” for the first time during this crisis, the ECB tightened the cost of money even further, putting, for example, the main eurozone rate at 2%.
It is this refinancing cost applied to banks whenever they need to get regular funds from central banks. If this cost goes up, banks will sooner or later pass this squeeze on to customers.
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