The decision comes a day after the US Federal Reserve increased rates by a quarter-point, and takes the benchmark rate across the 20 countries that use the euro to 3.25%. The ECB has now hiked borrowing costs at seven consecutive meetings since July in a bid to get inflation under control. “Headline inflation has declined over recent months, but underlying price pressures remain strong,” the ECB said in a statement.
But core inflation, which strips out volatile food and energy prices, unexpectedly eased to 5.6% in April — sending a signal that price rises, while still steep, could be slowing. The ECB targets an inflation rate of 2%. Since its last meeting on March 16 — which took place just days before the emergency sale of Credit Suisse\n \n to rival UBS\n \n — the outlook for lending has weakened further, potentially reducing the need for future rate hikes.
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