The European Central Bank announced another massive interest rate increase on Thursday, intensifying its battle against soaring inflation across the eurozone.
Why it matters: The central bank raised borrowing costs by three-quarters of a percentage point, the second consecutive hike of this magnitude. The move risks further crushing the euro-area economy, which is already feared to be on the brink of a recession.
- The announcement on Thursday brings its key deposit rate to 1.5%.
What they're saying: In a statement, the ECB said it "expects to raise interest rates further, to ensure the timely return of inflation to its 2% medium-term inflation target."
Where it stands: Inflation in the eurozone hit 9.9% in September compared to a year ago, driven by higher energy costs related to fallout from Russia's invasion of Ukraine.
- While the key source of Europe's inflation problem differs from that in the U.S. — energy, not necessarily too much demand — the ECB is taking historically big steps that mirror that of the Federal Reserve and its other central bank peers to tame rising prices.
The bottom line: The ECB was among the last major central banks to begin raising interest rates as inflation surged across much of the globe. Now it's acting aggressively to catch up.
