ECB to announce further interest rate hike

Brussels: The European Central Bank (ECB) was expected to announce a further interest rate hike on Thursday in a bid to tackle inflation in the eurozone.

Economists predict the Frankfurt-based bank will raise the benchmark interest rate by 0.25 percentage points in what would be the ninth increase in a year.

ECB President Christine Lagarde had already flagged the move at a conference in Portugal last month.

"Our job is not done. Barring a material change to the outlook, we will continue to increase rates in July," she said at the time.

Raising interest rates is seen as a tool to bring down inflation because it can make loans more expensive, which in turn can slow demand and combat soaring prices.

Consumer prices in the 20-country eurozone have been sinking since peaking in October last year, but they still rose by 5.5% year-on-year in June. The ECB's goal is to bring inflation down to 2% in the medium term.

The bank began raising interest rates in July 2022 after Russia's war in Ukraine led to climbing energy and food prices. That followed years of near-zero and negative interest rates in the euro area.

In the past year, it has raised rates eight times in a row, increasing borrowing costs by four percentage points.

On Wednesday, the US Federal Reserve raised its benchmark lending rate and suggested further hikes were on the cards.