Friday, 7 October, 2022

Eurozone interest rates in record rise to fight inflation

Eurozone interest rates in record rise to fight inflation

Popular News

The European Central Bank has announced a record rise in eurozone interest rates as it seeks to fight inflation.

Prices in the bloc are rising at the highest pace for half a century as energy costs soar.

The ECB lifted all its key rates by three-quarters of a percentage point and warned that it was likely to raise rates again later this year.

The bank had raised interest rates in July, its first increase in more than 11 years.

The ECB raised its key deposit rate - how much interest it pays on deposits - to 0.75% from zero, and lifted its main refinancing rate - how much banks have to pay when they borrow money from the ECB - to 1.25% from 0.5%.

Central banks raise interest rates to increase the cost of borrowing, which should lead people to borrow and spend less, and to save more. In theory, this helps curb price rises.

Inflation around the world is being driven by higher energy prices. Prices were rising more quickly as economies recovered from the effects of the coronavirus pandemic, but they jumped further due to Russia's war in Ukraine.

ECB president Christine Lagarde said the central bank could not control high energy prices.