In an effort to control the high inflation brought on by rising energy prices and the conflict in Ukraine, the European Central Bank startled investors by raising interest rates by a larger-than-expected half percent.
The decision was made after officials had been teasing a quarter-point rate increase for weeks. It was the ECB’s first rate increase in eleven years.
The bank’s governing council stated in a statement that future similar moves were anticipated and that it had taken action based on an “updated assessment of inflation risks.”
The decision made today, which comes as the European currency union deals with the pandemic, war, and political upheaval, lowers the main deposit rate in Europe to zero after an extraordinary eight years in negative territory.
Also on Thursday, Prime Minister Mario Draghi resigned as a result of the dissolution of his coalition government, deepening the political crisis in Italy, the third-largest economy in the eurozone.
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