Eurozone interest rates have surged to their highest level in 22 years, as the European Central Bank signals its intent to further raise borrowing rates to a record high in the upcoming months. The headline deposit rate has been pushed to 3.75 percent, matching the 2001 record, with President Christine Lagarde expressing her willingness to take even more measures to bring down inflation from the current 5.5 percent.
Ms. Lagarde stated, "Our aim is to tackle inflation relentlessly. We are determined to reach our 2 percent target, no matter what it takes."
Despite a decline from the peak of 11.5 percent in October, inflation is still expected to remain persistently high, prompting speculations of more rate hikes in the foreseeable future.
The European Central Bank's rate increase follows a similar move by the US Federal Reserve, which pushed its Federal Funds Rate to a range of 5.25 percent to 5.5 percent, also the highest rate in 22 years.
Economists anticipate further rate adjustments by the Fed's chairman, Jerome Powell, after surprising data on Thursday revealed a growth spurt in the US economy. GDP growth accelerated to an annualized pace of 2.4 percent in the second quarter, up from 2 percent in the preceding three months, defying earlier predictions of a slowdown. The resilience of the world's largest economy led to a decline in the value of the pound against the dollar, with Sterling falling 0.5 percent to $1.285 as traders considered the likelihood of additional Fed rate hikes.
