ECB fans talk of September pause after raising rates to 23-year high
By Balazs Koranyi and Francesco Canepa
FRANKFURT (Reuters) -The European Central Bank raised interest rates for the ninth consecutive time on Thursday but dialled up the possibility of a pause next month as stubbornly high inflation and recession worries pull policymakers in opposing directions.
Fighting off a historic surge in prices, the ECB has now lifted borrowing costs by a combined 425 basis points since last July, worried that price growth could be perpetuated by both rising costs and wages in an exceptionally tight jobs market.
With Thursday's 25 basis point move, the ECB's deposit rate stands at 3.75%, its highest level since 2000, before euro banknotes and coins were even in circulation. The main refinancing rate was set at 4.25%.
ECB President Christine Lagarde said what comes next was in the balance, although the central bank was determined to «break the back» of inflation. It was widely criticised for a slow response to last year's initial surge in prices.
She had responded to most of the questions at a press conference by stressing that all options remained on the table but sent the euro tumbling with a dovish flourish near the end.
«Do we have more ground to cover? At this point in time I wouldn't say so,» Lagarde said, almost unprompted.
«Because as I said, the data that we just discussed, and the assessment of (incoming) data will actually tell us whether and how much ground we have to cover in September and at subsequent meetings.»
The ECB's full policy statement had said interest rates would be set at «sufficiently restrictive levels for as long as necessary» for a timely return of inflation to its 2% target.
But it dropped a reference to rates having to be «brought» to a level that cuts inflation
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