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European Central Bank Raises Interest Rates For The First Time In 11 Years As Global Inflation Surges


The European Central Bank on Thursday authorized its first interest rate hike in 11 years in a bid to help cool rising inflation, becoming the latest central bank to more aggressively unwind policy that fueled economic growth during the pandemic even as global recession fears continue to rise.

Key Facts

In a statement on Thursday, the ECB said it would raise rates by 50 basis points as a “key step to make sure inflation returns to its 2% target over the medium target”—coming in at the higher end of expectations calling for an increase of at least 25 basis points.

The decision comes after data showing inflation in the United Kingdom skyrocketed 9.4% in June, hitting a new 40-year high and surpassing similarly high inflation of 9.1% in the United States.

In a speech late last month, ECB President Christine Lagarde warned there are “growing signs”—including the ongoing war in Ukraine—that suggest “supply shocks hitting the economy could linger for longer” and further warned unforeseen shocks could de-anchor inflation expectations.

This is a developing story. Please check back for updates.

Further Reading

Inflation Goes Global: It’s Not Just Rising In The U.S.—But Europe, South Korea And More (Forbes)

Inflation May Get Much Worse This Summer—And Could Linger ‘Many Years’—Experts Warn (Forbes)