European Central Bank makes largest-ever interest rate hike
The European Central Bank has made its largest-ever interest rate increase to combat record inflation that is squeezing consumers and pushing the 19 countries that use the euro currency toward recession
FRANKFURT, Germany (AP) — The European Central Bank made its largest-ever interest rate increase Thursday, following the U.S. Federal Reserve and other central banks in a global stampede of rapid rate hikes meant to snuff out the inflation that is squeezing consumers and pushing Europe toward recession.
The bank’s governing council raised its key benchmarks by an unprecedented three-quarters of a percentage point for the 19 countries that use the euro currency. The ECB usually moves rates by a quarter-point and had not raised its key bank lending rate by three-quarters of a point since the euro’s launch in 1999.
Bank President Christine Lagarde said the ECB would keep hiking rates “over the next several meetings" because “inflation remains far too high and is likely to stay above our target for an extended period.”
Lagarde stopped short of predicting a recession, though many economists foresee one at the end of the year and beginning of 2023 as high energy and food prices sap people's spending power. The bank's assumption is economic output would not fall outright but “stagnate" later this year and early next, she said.
