FRANKFURT: The European Central Bank (ECB) announced the biggest rate increase in its history on Thursday and promised additional increases as it tries to bring inflation down from record highs.
The ECB benchmark interest rates were increased by policymakers by 75 basis points, the biggest increase since a technical change made soon after the institution’s creation in 1999.
Inflation in the Eurozone reached a record high of 9.1% in August as individuals and businesses were under pressure from sharp increases in energy costs following Russia’s invasion of Ukraine.
According to the ECB’s most recent projections, inflation will average 8.1 percent in 2022, suggesting that consumer prices would likely continue to grow swiftly “for a prolonged period.”
The ECB said that the “significant step” sped up its transition from a “very supportive level of policy rates” to one that would bring inflation back to its two-percent target.
ECB President Christine Lagarde stated at a press conference that the Frankfurt-based organisation was on a “journey” to hike interest rates and control inflation.
With its first rate hike in more than ten years and a 50-basis-point increase, the ECB already exceeded expectations at its meeting in July.