ECB plans big rate hike as inflation hits record high

At their most recent meeting, policymakers at the European Central Bank increased interest rates for the first time in more than ten years. On Thursday, they are expected to announce another sizeable increase in an effort to rein in inflation.

The pace of consumer price hikes has reached new highs as a result of sharp increases in energy prices following Russia’s invasion of Ukraine.

Inflation in the eurozone reached 9.1 percent in August, a record in the history of the common currency and significantly higher than the ECB’s goal rate of two percent. According to Carsten Brzeski, director of macro at the ING bank, the “only question” for the ECB’s meeting was “whether it will be a 50 or 75 basis point hike,”

At the end of August, ECB board member Isabel Schnabel said the central bank needs to demonstrate “determination” to contain price increases.

According to her, this strategy would allow the central bank to combat the current inflationary wave “more forcefully to the current bout of inflation, even at the risk of lower growth and higher unemployment”