Eurozone interest rates have reached a record high in an effort to fight inflation
Prices in the bloc are increasing at the fastest rate in 50 years as energy costs surge.
The ECB lifted all its key rates by three-quarters of a percentage point and warned that it was likely to raise rates again later this year.
The bank had raised interest rates in July, its first increase in more than 11 years.
“Price pressures have continued to strengthen and broaden across the economy,” the ECB said after its latest decision.
The ECB raised its interest rates in order to make borrowing more expensive and encourage people to save more. This should help curb inflationary pressure in the economy. By making it more expensive to borrow, the ECB hopes that people will be less likely to borrow and spend, and more likely to save.
Inflation rates around the world have increased as a result of global oil prices rising. Prices were already on the rise as economies began to recover from the coronavirus pandemic, but they spiked even further when Russia invaded Ukraine.
ECB president Christine Lagarde said that unfortunately, the central bank does not have the power to regulate or control high energy prices.
“I cannot reduce the price of energy,” she said. “I cannot convince the big players of this world to reduce gas prices. I cannot reform the electricity market. And I am very pleased to see that the European Commission is considering steps to that effect because monetary policy is not going to reduce the price of energy.”
She added that if gas prices continue to “skyrocket”, that would be “recessionary”.
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