ECB meets expectations with 25bps hike

Highest since 2001

The European Central Bank has hiked interest rates by 25bps to 3.5%, meeting expectations and continuing its streak of hikes that began in July 2022.

The new headline rate is the highest for the ECB since May 2001, and comes as inflation in the bloc has decelerated faster than expected, falling from a peak of 10.6% in October 2022 to 6.1% in May. "Inflation has been coming down but is projected to remain too high for too long," the ECB said in a statement. The ECB also slightly increased its inflation forecasts, expecting inflation in 2023 to average 5.4% compared to a prior forecast of 5.3%, and inflation in 2024 to average 3% compared to a prior forecast of 2.9%. It credited the rising forecast to "past upward surprises and th...