European Central Bank hikes interest rates to combat inflation and leaves door open to more
The European Central Bank has raised interest rates for the ninth straight time in its yearlong campaign to stamp out painfully high inflation
FRANKFURT, Germany — The European Central Bank raised interest rates for the ninth straight time Thursday in its yearlong campaign to stamp out painfully high inflation and kept the door open to further hikes despite increasing fears of recession.
ECB President Christine Lagarde had all but promised the quarter-percentage point increase and said the bank's next moves would be determined by what the data — including inflation and job numbers — will show.
“We have an open mind as to what the decisions will be in September and in subsequent meetings,” she told reporters. “So we might hike and we might hold."
Lagarde said that if the bank pauses, “it would not necessarily be for an extended period of time.” Decisions could vary from one meeting to the next, she said, but insisted that the ECB is “very strongly rooted in our determination to break the back of inflation.”
“Are we satisfied? Are we claiming victory? No. We want go to the end of the game,” she said.
U.S. Federal Reserve Chair Jerome Powell was similarly noncommittal about whether more rate increases might be coming after the Fed on Wednesday raised its key rate for the 11th time in 17 months.
Central banks around the world have been raising borrowing costs to combat inflation unleashed by higher energy prices after Russia invaded Ukraine and supply chain backups as the global economy recovered from the coronavirus pandemic.
Inflation in the 20 countries that use the euro currency has fallen from its peak of 10.6% in October to 5.5% in June — still well above the bank’s target of 2% considered best for the economy.
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