FRANKFURT: The European Central Bank raised interest rates again Thursday and signalled it would “stay the course” in its monetary policy tightening, even as sky-high inflation starts to slow.
The ECB lifted its key rates half a percentage point, as widely expected, seeking to curb soaring prices of energy and food fuelled by Russia’s invasion of Ukraine.
The Frankfurt-based institution now has raised borrowing costs three percentage points since launching its unprecedented campaign of monetary tightening in July.
Also on Thursday, the Bank of England hiked rates for a 10th time in a row, while America’s Federal Reserve raised borrowing costs again Wednesday – albeit at a slower pace.
Signs are growing the eurozone may have passed the worst of an economic shock, with inflation slowing from a peak in October and the single currency area eking out growth at the end of 2022.
Bank of England hikes interest rate tenth time in row
But making its latest rate hike, the bank said it would “stay the course in raising interest rates significantly at a steady pace”, repeating the same hawkish language used after its December meeting.
The ECB “intends to raise interest rates by another 50 basis points at its next monetary policy meeting in March, and it will then evaluate the subsequent path of its monetary policy”, it said.
High inflation
While consumer price growth in the 20-nation currency club has eased, at 8.5 percent, it is still way above the ECB’s two-percent target.
Thursday’s rate increase was the ECB’s fifth in a row.
Fed delivers small rate hike, still expects ‘ongoing increases’
Its three key rates now sit in a range between 2.50 and 3.25 percent.
It followed a half point hike in December, but was lower than two jumbo 75 basis point increases before that.
There is already debate developing among policymakers about when to start slowing the pace, however.
The recent less gloomy data have given cause for hope that Russia’s efforts to strangle crucial gas supplies to Europe may not trigger the economic shock once feared.
As Moscow slashed deliveries following its invasion of Ukraine, European governments rolled out relief measures to cushion consumers and businesses from surging prices, and rushed to fill up storage facilities.
Wholesale gas prices have been easing while relatively mild winter weather has meant supplies have not been used up as quickly as expected.
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