European Central Bank hikes key rate to record high
NEW DELHI: The European Central Bank hiked its key interest rate to a record high Thursday, pressing its fight against stubbornly high inflation that has been plaguing consumers ‘even as worries grow that higher borrowing costs could help push the economy into recession.
The increase of a quarter-percentage point comes as central banks around the world, including the US Federal Reserve, try to judge how much anti-inflation medicine is too much and what’s the right point to halt their swift series of rate rates before the economy tips into a downturn and people lose their jobs.
“Inflation has declined, and we want it to continue to decline and to reinforce that process,” ECB President Christine Lagarde said.
Nevertheless, the bank signalled that its 10th straight hike could be its last, shifting its emphasis from raising rates to keeping them high enough for long enough to beat down inflation. Thursday’s decision raises the ECB’s benchmark deposit rate to 4 per cent, up drastically from minus 0.5 per cent just a little more than a year ago and the highest since the euro was established in 1999.