European Central Bank raises interest rates by 0.25 percentage points

THE EUROPEAN CENTRAL Bank has raised interest rates by 0.25 percentage points to fight inflation but at a slower pace, as higher borrowing costs take their toll and banking sector fears resurface.ECB president Christine Lagarde said today: “The inflation outlook continues to be too high for too long.

With the latest increase, mortgage repayments for customers on tracker mortgages will increase, while it is not clear if banks will increase variable rate mortgages. With inflation still high, there had been debate about whether the ECB would unleash another half-point raise – as it did at its three previous meetings – or downshift to a quarter point.Economists at UniCredit and Deutsche Bank said a quarter-point hike by the ECB was most likely.

Core inflation, which excludes volatile food and fuel, slowed slightly but was still high at 5.6%, underlining the expectation that the ECB will press ahead with its campaign to beat inflation into submission with rate hikes. “Hundreds of thousands of families are going to hear in the next hour or so that their mortgages are going up and they just listened to you and they’ve heard nothing in relation to direct support from yourself.”

Martin fired back that Sinn Féin didn’t address interest rates in their budget submission last autumn despite the fact that the ECB had already raised rates twice at the time.

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