European Central Bank confirms plans for first rate hike in 11 years
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European Central Bank buckles down on price stability 03:01London (CNN Business)The European Central Bank held off on raising interest rates on Thursday, but confirmed plans for a hike next month.
The bank announced that it would raise the cost of borrowing by 25 basis points in July — its first rate hike in more than a decade — and said a bigger hike could follow in September "if the medium-term inflation outlook persists or deteriorates."The ECB raised its forecast for annual inflation in the eurozone "significantly" to 6.8% this year, and said it would remain just above its target of 2% in 2024. It also cut its growth forecasts. GDP for the 19 countries that use the euro is now projected to rise by 2.8% in 2022 and by just 2.1% next year.Eurozone inflation hit an all-time high of 8.1% last month, according to Eurostat. The war in Ukraine has fueled global inflation and exerted pressure on the European Union to find alternatives to Russian oil and gas, on which it is heavily reliant. Europe has agreed to wind down its exports — introducing phased embargoes on oil and coal — and is now scrambling to source alternative supplies of energy at a time of soaring fossil fuel prices.Read MoreThe ECB has been slower in moving to tackle inflation than its counterparts in the United Kingdom and United States, which have both raised rates in the past few months. But its task is more tricky as Europe is more directly exposed to the economic fallout from the war in Ukraine. The central bank is trying to strike a delicate balance between raising rates to hold down rising prices, but not by so much that it tips the region into a recession. — This is a developing story and will be updated. Click Here To Get Funded!