The European Central Bank raised interest rates by 25 basis points on Thursday, a ninth consecutive rate hike, saying inflation is still expected to remain too high for too long despite the recent slowdown. This brought the rate on main refinancing operations to 4.25%, the highest since October 2008, and the rate on the deposit facility to an over 22-year high of 3.75%. The ECB has also committed to following a “data-dependent approach” to future rate decisions and said that rates would be set at sufficiently restrictive levels for as long as necessary to bring inflation back to its 2% target. Since the commencement of the central bank’s tightening cycle in July 2022, ECB officials have implemented an unprecedented 425 basis point increase in rates, marking the fastest tightening pace in its history.
