ECB rushes to tighten as half-point hike matched by crisis tool
BNN Bloomberg
The European Central Bank raised its key interest rate by 50 basis points, the first increase in 11 years and the biggest since 2000 as it confronts surging inflation even as recession risks mount.
With Italy enduring a fresh bout of political turmoil, President Christine Lagarde and colleagues also unveiled a tool they hope will ensure markets don’t push up borrowing costs too aggressively in vulnerable economies, as happened in 2012 when the euro’s very existence was questioned.
“Price pressures are spreading across more and more sectors,” Lagarde told a news conference in Frankfurt. “Most measures of underlying inflation have risen further. We expect inflation to remain undesirably high for some time.”
Thursday’s rate move aligns the ECB with a global push to tighten and ends an eight-year experiment with subzero borrowing costs. The ECB said in a statement that further normalization of interest rates will be appropriate at upcoming meetings.
