The European Central Bank (ECB) was expected to announce a further interest rate hike on Thursday in a bid to tackle inflation in the eurozone.
Economists predict the Frankfurt-based bank will raise the benchmark interest rate by 0.25 percentage points in what would be the ninth increase in a year.
ECB President Christine Lagarde had already flagged the move at a conference in Portugal last month.
“Our job is not done. Barring a material change to the outlook, we will continue to increase rates in July,” she said at the time.
Why is the ECB expected to hike rates?
Raising interest rates is seen as a tool to bring down inflation because it can make loans more expensive, which in turn can slow demand and combat soaring prices.
Consumer prices in the 20-country eurozone have been sinking since peaking in October last year, but they still rose by 5.5% year-on-year in June. The ECB’s goal is to bring inflation down to 2% in the medium term.
The bank began raising interest rates in July 2022 after Russia’s war in Ukraine led to climbing energy and food prices. That followed years of near-zero and negative interest rates in the euro area.
In the past year, it has raised rates eight times in a row, increasing borrowing costs by four percentage points.
On Wednesday, the US Federal Reserve raised its benchmark lending rate and suggested further hikes were on the cards.
nm/fb (dpa, AFP, Reuters)
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