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The European Central Bank has raised interest rates back to their record high, warning consumer prices are still rising too fast while keeping its options open for further increases.
The ECB’s decision on Thursday to raise its benchmark rate by a quarter percentage point to 3.75 per cent matches a peak last reached in 2001 when it was trying to boost the value of the newly launched euro.
The widely expected move, the ECB’s ninth consecutive rise, came a day after the US Federal Reserve raised rates by the same amount.
It followed a meeting of the ECB’s governing council in Frankfurt, where it was decided that the central bank would extend its already year-long tightening of eurozone monetary policy.
Most economists think major central banks are close to ending their rate rises, with inflation falling faster than expected and growth slowing.
But the ECB repeated its warning that inflation was still expected to remain “too high for too long” and committed to follow a “data-dependent approach” to future rate decisions.
Eurozone inflation has dropped from a peak of 10.6 per cent last year to 5.5 per cent in June and a further slowdown is expected when July data is published on Monday.
This is a developing story
