The European Central Bank (ECB) announced its 10th consecutive interest rate increase on Thursday, a surprise move for some who were expecting officials would pause the rate-hiking campaign.
Why it matters: It’s the latest sign that policymakers believe inflation is still too persistent to forgo a quarter-percentage point hike, even as other global central banks have eased efforts to slow their respective economies.
Where it stands: Inflation in the euro area rose at a 5.3% annual rate in August, unchanged from the prior month. The core measure, which excludes volatile items like food and energy, eased to 5.3%.
By the numbers: The ECB projects that average inflation will be 5.6% this year and 3.2% in 2024 — both higher than estimated in June, largely reflecting “a higher path for energy prices.” Excluding energy and food, inflation forecasts were revised lower.
The bottom line: Thursday’s move brings key interest rates across the euro bloc to the highest levels on record. Economic activity has in many of its economies, including its largest, Germany, has already slowed notably.
Yes, but: Officials did not totally rule out another increase down the line, noting that the ECB will continue to evaluate economic data to determine “the appropriate level and duration” of restrictive policy.