The European Central Bank has raised interest rates by 0.75 percentage points to their highest level since 2009, continuing to push up borrowing costs to tackle record eurozone inflation despite a looming recession in the region.
The move, announced after the ECB governing council met in Frankfurt on Thursday, was in line with market expectations and showed rate-setters were not yet ready to slow the pace of monetary tightening despite mounting political criticism.
Italy’s new prime minister Giorgia Meloni said this week that tighter monetary policy was “considered by many to be a rash choice”. Meloni’s remarks came a week after France’s president Emmanuel Macron warned he worried about central banks “smashing demand” to tackle inflation, now at a record high of 9.9 per cent.
The ECB said in a statement that its third “major policy rate increase in a row” meant it had made “substantial progress in withdrawing monetary policy accommodation”. But it added that it still expected to raise rates further because inflation remained “far too high”.
The central bank said its benchmark deposit rate would rise from 0.75 per cent to 1.5 per cent — the first time it has made two consecutive rate increases of that size. Its main refinancing operations rate would rise by a similar amount to 2 per cent and its marginal lending facility rate would rise to 2.25 per cent.
