The European Central Bank (ECB) on June 15 raised interest rates by 0.25% and said it would raise rates again in July, warning that the inflation fight was far from over.
The ECB's latest rate hike contrasts with the US Federal Reserve's decision to pause rate hikes a day earlier.
The ECB has raised interest rates at eight consecutive meetings since July 2022 (four months after the Fed began raising rates) to fight inflation. The latest move took the eurozone's benchmark lending rate to 3.5%, its highest level since May 2001.
“The ECB’s key interest rates will be brought to a level sufficient to bring inflation back to the 2% medium-term target in time and will be kept there for as long as necessary,” ECB President Christine Lagarde said in a press conference after the decision was made.
European Central Bank (ECB) President Christine Lagarde speaks to the press after a monetary policy meeting of the Governing Council in Frankfurt, Germany on June 15. Photo: Reuters
“We are not thinking about a pause,” Ms. Lagarde said. “It is very likely that the bank will raise rates again at its next meeting on July 27, unless there is a material change to our inflation expectations,” she added.
Economists polled by Reuters expect the ECB to raise interest rates by 0.25% in July before holding off for the rest of the year.
Inflation in the euro zone is now at 6.1%, down from a record 10.6% in October 2022, but still well above the bank's target.
The bank repeated its warning that inflation is expected to “remain too high for too long”, and will not return to its 2% target by 2025 .
Nguyen Tuyet (According to Financial Times, Reuters, NY Times)
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