The European Central Bank hiked a key interest rate to a record high on Thursday as it battles stubbornly high inflation.
The main refinancing rate was lifted to 4.5% and the deposit facility rate to 4%, the highest level since the euro currency was launched in 1999.
It marked the 10th straight increase since the ECB launched the most aggressive hiking cycle in its history in July last year.
The ECB said that the eurozone’s persistently high inflation will likely decline more slowly than forecast three months ago.
For the current year, the central bank now expects an annual inflation rate of 5.6%, compared to the previous estimate in June of 5.4%. The bank foresees an inflation rate of 3.2% in 2024 and 2.1% in 2025.
The ECB’s target across the 20-country eurozone as a whole is 2% over the medium term.
The bank stressed that the high interest rates “will make a substantial contribution to the timely return of inflation to the target.”
“The Governing Council’s future decisions will ensure that the key ECB interest rates will be set at sufficiently restrictive levels for as long as necessary,” the bank said in a press release.
When it comes to overall economic growth, the ECB now expects the eurozone to grow by 0.7% this year, slightly weaker than the 0.9% predicted in June.
Source: Qatar News Agency