FRANKFURT, Germany — The European Central Bank pressed ahead with another interest rate hike and made clear more are on the way, aiming to crush inflation that is driving up the cost of groceries even after the US Federal Reserve took a break from its own string of increases.
The quarter-point rate boost, to 3.5%, is the eighth straight increase since July 2022 for the 20 countries that use the euro currency.
That is an unprecedentedly swift campaign to tighten the flow of credit to the economy as the bank seeks to return inflation to its target of 2% from 6.1%.
ECB President Christine Lagarde said more hikes, including at the bank’s next meeting on July 27, are in the cards. ECB projections acknowledge that controlling inflation will take months longer, even after the rate has fallen from a double-digit peak late last year.
“Are we done? Have we finished the journey? No, we’re not at destination,” she said at a news conference according to AP. “Do we still have ground to cover? Yes, we have ground to cover.”
Lagarde said the bank “will continue to hike at our next meeting. So we are not thinking about pausing, as you can tell.”
Central banks around the world are trying to wrestle down price spikes that have been squeezing households and businesses with higher bills for basics like food and rent but some are starting to diverge in their decisions to avoid plunging their economies into further trouble.
The US Federal Reserve suspended its series of rate hikes Wednesday as it assesses the impact of higher rates on economic growth and jobs.
It takes months for rate hikes to work their way through to the economy, and a pause can be a chance to see if the medicine is working.
