Dovish ECB hikes rates for first time since eurozone debt crisis

50bps increase to tackle inflation

clock • 2 min read

The European Central Bank has raised interest rates for the first time in 11 years, to 0.5%, in response to eurozone inflation soaring to 8.6% in June.

Economists had been pricing in a hike of 25bps for some time, expecting the central bank to finally prioritise the rampant inflation over growth concerns. The latter was a particularly pressing issue in Europe since it had a direct, geographic exposure to the war in Ukraine, which meant it felt the impacts of the energy crisis even more intensely. Seema Shah, chief strategist at Principal Global Investors, said that the end of the ECB era of negative rates brings with it significant economic concerns. "The ECB is hiking into a drastically slowing economy, facing a severe stagflationar...

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