The European Central Bank (ECB) raised its key interest rates by an unprecedented 75 basis points on Thursday and signaled further hikes to come. The move comes as many economists see the EU headed for a recession this winter.
Following up on its 50 basis-point hike in July, the ECB raised its deposit rate to 0.75% from zero and lifted its main refinancing rate to 1.25%, the highest levels for both since 2011. Further moves are anticipated at the October and December meetings.
“Price pressures have continued to strengthen and broaden across the economy and inflation may rise further in the near term,” the regulator said in a statement.
“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 added.
The EU has been struggling to combat red-hot inflation across the bloc, driven by runaway energy prices. Meanwhile, consumer prices in the Eurozone soared 9.1% in August, setting a ninth consecutive monthly record.
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