ECB hikes rates to a record high – but hints they have peaked
Claim: ECB chief Christine Lagarde
The European Central Bank (ECB) raised interest rates to a joint record high – but hinted borrowing costs in the eurozone may now have peaked.
As it continued its fight against inflation, the Frankfurt-based bank pushed rates up by 0.25 percentage points to 3.75 per cent.
That was the joint highest level on record, and on a par with the rate hit in 2001 when it was trying to boost the value of the newly launched euro. The move followed a rise by the Federal Reserve in the US on Wednesday, with the Bank of England set to follow suit next week.
But the ECB hinted rates may have peaked, having been raised from minus-0.5 per cent to the current level of 3.75 per cent since last July.
‘Do we have more ground to cover? At this point in time I wouldn’t say so,’ said ECB chief Christine Lagarde.
Turning attention to its next decision in September, she added: ‘There is the possibility of a hike. There is the possibility of a pause. It’s a decisive ‘maybe’.’ The comments fuelled hopes that interest rates globally may be at, or close to, their peak.
‘The ECB, like the Fed, is done raising rates, though there is still a material risk of a further hike,’ said Krishna Guha of Evercore ISI. The Bank of England is expected to raise rates next week from 5 per cent to either 5.25 per cent or 5.5 per cent.