Last Updated: July 21, 2022, 19:25 IST
The European Central Bank (ECB) also lifted its main refinancing rate to 0.50 per cent.
ECB raised its benchmark deposit rate by 50 basis points to zero per cent
The European Central Bank raised interest rates by more than expected on Thursday as concerns about runaway inflation trumped growth considerations, even while the euro zone economy reels from the impact of Russia’s war in Ukraine.
The ECB raised its benchmark deposit rate by 50 basis points to zero per cent, breaking its own guidance for a 25 basis point move as it joined global peers in jacking up borrowing costs. It was the euro zone central bank’s first rate hike for 11 years.
Policymakers also agreed to provide extra help for the 19-country currency bloc’s more indebted nations – among them Italy – with a new bond purchase scheme intended to cap the rise in their borrowing costs and so limit financial fragmentation.
Ending an eight-year experiment with negative interest rates, the ECB lifted its main refinancing rate too, to 0.50%, and promised more hikes possibly as soon as its Sept. 8 meeting.
At a news conference, ECB President Christine Lagarde fielded repeated questions about how the ECB came to diverge from its original plans for tightening, and how the new yield-capping tool fitted into its core inflation-fighting mandate.
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