While battling persistently high inflation, the European Central Bank increased a key interest rate to a record high on Thursday, but it also hinted that its long-standing cycle of rate increases might be coming to an end.
The carefully watched deposit rate was raised by another quarter point by policymakers, bringing it to 4.00 percent, the highest level since the euro’s 1999 launch.
It was the tenth straight hike since the central bank began the most aggressive round of rate increases in its history in July of last year, when the cost of food and energy skyrocketed as a result of Russia’s invasion of Ukraine.
Despite mounting evidence of a rapidly worsening economic outlook in the 20 euro-using nations, the bank went ahead with another increase.
But even as it emphasized that inflation was still “expected to remain too high for too long,” the ECB also stated that borrowing costs had reached levels that would quickly assist return price increases to the two-percent objective.
After the rate decision was made public, ECB president Christine Lagarde emphasized that rates had now reached a point where they would “substantially contribute” to slowing the rate of price increases.
Insisting that policymakers “can’t say” yet that rates had peaked and that future decisions would depend on incoming data, she refrained from expressing a firm commitment to no additional rises.