The European Central Bank (ECB) has raised interest rates for the first time in 11 years. It joins several other central banks in prioritising concerns about runaway inflation – driven by, among other factors – Russia’s invasion of Ukraine – over fears of stifling growth.
The ECB raised its benchmark deposit rate by 50 basis points to 0 percent on Thursday, despite for weeks guiding markets to expect a 25 basis point increase. The bank, which encompasses the 19 countries that use the euro, also increased its main refinancing rate to 0.50 percent and promised possible further rate hikes as soon as its next meeting on September 8.
The bank said in a statement after its governing council held a meeting in the German city of Frankfurt that the larger-than-expected hike was justified by an “updated assessment of inflation risks”.
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