The European Central Bank on Thursday announced a 75 basis point interest rate rise, taking its benchmark deposit rate to 0.75%, APA reports citing CNBC.
“This major step frontloads the transition from the prevailing highly accommodative level of policy rates towards levels that will ensure the timely return of inflation to the ECB’s 2% medium-term target,” it said in a statement.
It added it “expects to raise interest rates further, because inflation remains far too high and is likely to stay above target for an extended period.”
Markets had largely priced in a 75 basis point hike, with the euro remaining flat against the British pound and rising slightly against the dollar to 1.0005. On Monday the euro dipped below 99 cents for the first time in 20 years.
The ECB move follows a hike from -0.5% to zero at its July meeting. The central bank, which sets monetary policy for the 19 euro
-using nations, has kept rates in negative territory since 2014 in a bid to spur spending and combat low inflation.
The central bank now faces a very different problem, with consumer prices in the euro zone rising by 9.1% in August, setting a ninth consecutive record.
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