The European Central Bank decided to impose another big interest rate hike on Thursday, as policymakers try to ease the region's highest inflation.
The central bank, which sets monetary policy for the 19 countries, raised interest rates by three-quarters of a percentage point, matching the previous increase last month. After a slow start to its first rate hike in more than a decade in July, the ECB said it had begun to tighten its stance with a quick hike as inflation proved worse and more persistent than expected.
Consumer prices rose 9.9 percent on average in the European zone in September from a year earlier, the fastest rate on record, driven by energy and food prices.
"Inflation remains too high and will remain above target for an extended period," the bank said in a statement on Thursday.
The challenges facing the central bank have increased in recent months as lawmakers have taken more steps to protect households and businesses from rising prices. The central bank has warned that fiscal policy should not be at odds with monetary policy. Britain has become an international example of this risk. Last week, Liz Truss resigned as prime minister after her tax cuts sparked turmoil in financial markets.
European governments are still divided over how they should respond to rising energy prices, with wealthier countries taking advantage of the fiscal position. Germany recently announced a €200 billion ($201 billion) aid plan for its households, businesses and industry.
The central bank's ability to control inflation has been sorely tested over the past year. Expectations that high inflation would pass quickly turned out to be misplaced following a series of economic shocks that prompted the central bank to act.
The euro lost 0.62% against the US dollar to trade at 1.0014.
