The European Central bank on Thursday reported a record loss in 2024 after it had aggressively hiked eurozone interest rates in response to soaring inflation.
The ECB lost 7.9 billion euros ($8.3 billion) last year, the second-straight year the Frankfurt-based institution has been in the red.
In 2023, the central bank was down 1.3 billion euros, its first loss since 2004 after an extended period of relatively low borrowing costs.
The figure for 2023 would have been similar to last year鈥檚 had the ECB not deployed all the 6.6 billion euros set aside to soak up losses.
The ECB began raising borrowing costs at an unprecedented rate in July 2022 as Russia鈥檚 war in Ukraine pushed up energy and food costs.
The central bank鈥檚 benchmark deposit rate topped out at four per cent in late 2023, as price pressures began to wane.
With inflation headed down, the ECB started cutting rates again from June 2024, but not enough to significantly affect its losses.
鈥楾he losses come after many years of substantial profits and are the result of policy actions taken... to fulfil its primary mandate of maintaining price stability,鈥� the ECB said.
鈥業ncreases in the ECB鈥檚 key interest rates in 2022 and 2023鈥� resulted in higher interest expenses for the central bank itself on its liabilities, while income from interest on its assets did not rise as fast.
The last two years of losses would be 鈥榦ffset against future profits鈥� on the ECB鈥檚 balance sheet, it added.
The ECB would 鈥榮till incur losses in the coming years鈥�.
鈥楽hould this be the case, any such losses are expected to be lower than those incurred in 2023 and 2024. Thereafter, the ECB is expected to return to making profits,鈥� the bank said.
The ECB said it remained in a robust financial position and could 鈥榝ulfil its primary mandate of maintaining price stability regardless of any losses鈥�.
