European Central Bank Raises Interest Rates by 75 Basis Points
Banks to Face Higher Borrowing Costs as ECB Aims to Curb Inflation
The Governing Council of the European Central Bank (ECB) has decided to raise all three of the ECB's key interest rates by 75 basis points.
The decision, which was widely expected by financial markets, marks the first time the ECB has raised rates since 2011. It comes as the central bank grapples with soaring inflation, which hit 8.9% in the eurozone in July, well above the ECB's target of 2%.
The ECB's move is likely to have a significant impact on the eurozone economy. Higher interest rates make it more expensive for businesses and consumers to borrow money, which can slow economic growth. However, the ECB believes that raising rates is necessary to bring inflation under control and prevent it from becoming entrenched.
The ECB's decision is also likely to have a knock-on effect on other central banks around the world. The Federal Reserve is widely expected to raise interest rates again at its meeting next week, and other central banks are likely to follow suit.
The ECB's decision has been met with mixed reactions from financial markets. Stock markets have fallen slightly, while the euro has strengthened against the US dollar.
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