ALBAWABA – The European Central Bank (ECB) raised the key EU interest rate by 25 basis points to 3.5 percent Thursday, hitting a 22-year high.
ECB President Christine Lagarde also highlighted the likelihood of another hike in July.
"The key ECB interest rates will be brought to levels sufficiently restrictive to achieve a timely return of inflation to the 2 percent medium-term target and will be kept at those levels for as long as necessary," Lagarde said at a press conference following the decision.
She also said that she expects inflation to remain above target through 2025.
"Inflation has been coming down but is projected to be too high, for too long," she said.
The central bank raised their 2023 and 2024 projections for "core" inflation, excluding volatile energy and food, which the ECB watches closely.
This latest EU interest rate hike comes after the United States (US) Federal Reserve Board (Fed) pinned interest rates for June.
However, both the ECB and Fed have explicitly highlighted that further hikes are possible.
Eurozone inflation has been moderating for months, courtesy of lower energy prices and the steepest increase in rates in the ECB's 25-year history. But inflation remains unacceptably high for the ECB at 6.1 percent, with underlying price growth only starting to slow.
