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- The European Central Bank hiked its deposit rate by 50 basis points Thursday as it keeps battling inflation.
- Policymakers plan to make the same-size hike at the next monetary policy meeting in March.
- The ECB is battling soaring inflation in Europe driven in part by Russia’s war in Ukraine.
The European Central Bank raised interest rates by another 50 basis points Thursday as it pushes ahead with efforts to cool inflation without crushing the eurozone economy.
The ECB’s governing council hiked its main deposit rate by 50 basis points, or 0.5 percentage points, taking it to 2.5%. It signaled that it plans to bring in a similarly-sized increase at its next meeting in March.
Policymakers started hiking interest rates from a record low of -0.5% in July, lifting the cost of borrowing for the first time in 11 years.
“The Governing Council will stay the course in raising interest rates significantly at a steady pace and in keeping them at levels that are sufficiently restrictive to ensure a timely return of inflation to its 2% medium-term target,” the ECB’s monetary policy committee said in a statement.
“Accordingly, the Governing Council today decided to raise the three key ECB interest rates by 50 basis points and it expects to raise them further.”
It has raised rates five times since then as it tries to bring down high levels of inflation, which spiked across Europe after Russia’s invasion of Ukraine drove up the price of key commodities like crude oil and natural gas.
Investors had anticipated the 50-point hike, but were spooked Wednesday when Spain released a Consumer Price Index report that showed inflation had jumped by a hotter-than-expected 5.8% in January.
The euro was broadly unchanged at just under $1.10 after the bank’s announcement.