ECB Raises Rates More Than Expected To Fight Off Runaway Inflation

• The European Central Bank raised interest rates by more than expected on Thursday (July 21), confirming that concerns about runaway inflation now trump growth considerations, even as the euro zone economy reels from the impact of Russia's war in Ukraine.
• The ECB raised its benchmark deposit rate by 50 basis points to 0%, breaking its own guidance for a 25 basis point move as it joined global peers in jacking up borrowing costs. This was the euro zone central bank's first rate hike in 11 years.
• Ending an eight-year experiment with negative interest rates, the ECB also increased its main refinancing rate to 0.50% and promised further rate hikes possibly as soon as its next meeting on Sept. 8.
• With inflation already approaching double-digit territory, it is now at risk of getting entrenched above the ECB's 2% target and any gas shortage over the coming winter is likely to push prices even higher, perpetuating rapid price growth.

(Source: Reuters)