ECB raises rates to combat inflation as oil prices spike
The ECB raised interest rates to 2.50 per cent Thursday, citing Middle East conflict and high oil prices.
The European Central Bank increased rates by a quarter percentage point Thursday, bringing its benchmark to 2.50 per cent. The bank cited ongoing Middle East tensions pushing oil prices above $US100 a barrel, threatening inflation across the 21 eurozone countries.
A stronger-than-expected economy gave the ECB confidence that businesses can absorb higher borrowing costs. The bank paused rate rises in July but returned Thursday, saying inflation will remain well above its 2 per cent target for an extended period.
ECB President Christine Lagarde's remarks later Thursday are expected to signal whether more increases are coming.
Why it mattersCentral bank rate rises make borrowing more expensive, slowing demand and prices across the economy, but also reduce savings returns and affect mortgages.
AustraliaAustralia's Big Four banks are warning borrowers to expect a domestic cash rate rise by late September or Melbourne Cup day, potentially reaching 4.6 per cent, a 15-year high. Global inflation pressures and oil supply uncertainty may delay further cuts to Australian rates.
Corroborated bythenightly.com.au
✓ Claims checked against the source. checked 1 d ago
