Policymakers raised borrowing costs by another quarter point today.
ECB president Christine Lagarde believes the current rate can make a ‘substantial contribution’ to taming prices.
It marked the 10th straight increase since the central bank launched the most aggressive hiking cycle in its history in July last year after energy and food costs surged following Russia’s invasion of Ukraine. Speaking after the rate decision was announced, ECB president Christine Lagarde stressed that rates had now reached levels that would make a “substantial contribution” to taming fast-rising prices.
Berenberg Bank economist Holger Schmieding agreed it was the final increase for now, and that the central bank had “signalled that it expects to be on hold from now onwards for a significant period of time”. Highlighting the continued difficulties in bringing consumer prices under control, the ECB raised its forecast for inflation this year and next.But it also slashed its forecasts for eurozone growth over the next three years, and Lagarde acknowledged the picture was worsening.“The risks to economic growth are tilted to the downside.”Recent data showed second-quarter growth reached just 0.
Politicians in more indebted eurozone economies, including Italy and Portugal, have been urging the central bank to take its foot off the gas.
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