ECB hikes interest rates again
The European Central Bank raised interest rates again Thursday and signalled it would "stay the course" with an identical hike next month, even as the outlook in the eurozone brightens.
The ECB lifted its key rates half a percentage point, as widely expected, seeking to curb soaring prices of energy and food fuelled by Russia's invasion of Ukraine.
Earlier the same day, the Bank of England hiked rates for a 10th time in a row.
The ECB has now raised borrowing costs three percentage points since launching its unprecedented campaign of monetary tightening in July.
Signs are growing the eurozone may have passed the worst of an economic shock, with inflation slowing from a peak in October and the single currency area eking out growth at the end of 2022.
But making its latest rate hike, the bank said it would "stay the course in raising interest rates significantly at a steady pace", repeating the same hawkish language used after its last meeting in December.
The ECB "intends to raise interest rates by another 50 basis points at its next monetary policy meeting in March, and it will then evaluate the subsequent path of its monetary policy", the statement said.
With markets looking for clues about what might happen after March, ECB president Christine Lagarde told a press conference that the Frankfurtbased institution still has "ground to cover" in raising rates.
"We know that we are not done," she said, adding that the ECB'S determination to return inflation to its two-percent target "should not be doubted".
While consumer price growth in the eurozone has eased, slowing to 8.5 per cent in January according to preliminary data, it is still way above target.
Although the ECB has repeatedly stressed its determination to fight inflation, policymakers are walking a fine line – seeking to tighten enough but not so much that it dramatically deepens economic pain across Europe.
Lagarde offered relatively upbeat comments about the 20nation currency club's prospects, saying it had faced the fallout from Moscow's invasion of Ukraine and surging energy costs better than expected.
"Overall, the economy has proved more resilient than expected and should recover over the coming quarters," she said, citing improved confidence, easing supply chain bottlenecks and stable gas supplies.