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The European Central Bank raises rates for the first time in 11 years

The European Central Bank raises rates for the first time in 11 years



Citi chief economist: Recession risk is risingReplayMore Videos ... (15 Videos)Citi chief economist: Recession risk is risingProducts on the shelves getting smaller? You can blame 'shrinkflation'Amid inflation, economist warns avoiding recession won't be 'easy path'What can Biden actually do about inflation? History is a guide'Worse than we anticipated:' CNN reporter breaks down inflation dataLook back at when the euro hit parity with the dollar in 2002'America's job machine is firing on all cylinders': Romans on the June jobs reportRecession is likely coming. How bad will it be?Child care costs are rising. See how parents are copingSchwab top strategist: Consumers 'much better prepared' for downturn compared to Great Recession'Pay rent or buy some food': Millions of renters unsure if they can make rentShrinking UK economy could lead to a recession amid 40-year high inflationPowell: Recession after rate hikes certainly a possibilityWarren to Powell: Don't drive this economy off a cliffAnalyst: Gas tax holiday 'won't change people's behavior'London (CNN Business)In a bold attempt to get inflation under control, the European Central Bank on Thursday announced it would hike its key interest rate by a half percentage point.

That marks the first time since 2011 that the ECB has raised rates, and takes Europe's main rate back to zero. Rates in the region have been negative since 2014.The move, which takes effect on July 27, comes as Europe battles record inflation fed by surging energy prices. Annual inflation in the European Union jumped to 9.6% in June. It reached 8.6% for the 19 countries that use the euro.The central bank had previously said it would increase rates by a smaller margin, but decided it needed to be more aggressive based on an "updated assessment of inflation risk."The ECB also unveiled a new tool aimed at keeping a lid on borrowing costs in highly indebted countries in the euro zone, such as Italy and Greece, part of its effort to maintain cohesion within the region. Read MoreThe so-called Transmission Protection Instrument "can be activated to counter unwarranted, disorderly market dynamics that pose a serious threat to the transmission of monetary policy across the euro area," the central bank said.


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