ECB hikes interest rates to 22-year high as economy stumbles
European Central Bank must walk a fine line in raising interest rates sufficiently to dampen demand and contain inflation, without provoking economic slowdown
The European Central Bank (ECB) on Thursday said eurozone inflation was still too elevated as it raised interest rates for an eighth consecutive time to a two-decade high, despite a bleak economic outlook.
“Inflation has been coming down but is projected to remain too high for too long,” the ECB said, as it increased rates by another 25 basis points, taking the closely-watched deposit rate to 3.5 percent – its highest level since 2001.
Policymakers were "determined to ensure" a return to the bank's two-percent target, and will keep rates at sufficiently restrictive levels "for as long as necessary,” the ECB added.
The quarter-point hike was widely penciled in by analysts. They were instead hoping ECB president Christine Lagarde would have shed light on whether the bank's unprecedented campaign of monetary policy tightening was nearing the summit.
https://x.com/i/web/status/1669317840954957826
This post can't be displayed because social networks cookies have been deactivated. You can activate them by clicking .
In the United States, the Federal Reserve on Wednesday held off from raising interest rates again after 10 straight increases. But the Fed indicated more hikes were likely before the end of the year as inflation remained double the bank's target rate.
In the euro region, the ECB has hiked borrowing costs at the fastest rate ever to tame inflation after Russia's war in Ukraine sent food and energy prices soaring, raising rates by 3.75 percentage points since last July.
Like all central banks, the ECB has to walk a fine line in raising interest rates sufficiently to dampen demand and contain inflation, without provoking a sharp economic slowdown in the process. But the eurozone economy has proved less resilient than initially thought.