The European Central Bank raised interest rates again on Thursday and pegged at least one more hike at the same rate next month.
The ECB has raised rates at a high rate to fight the sudden surge in inflation in Europe. This is a series of byproducts of factors such as the effects of the COVID-19 pandemic and the energy crisis that followed Russia's invasion of Ukraine.
The central bank for the 20 countries that share the euro currency raised rates by another half percentage point to 2.5%, in line with what it said in December and with market expectations.
At the same time the ECB stated that the next rate hike would be of the same size but would leave its options open for the foreseeable future.
"Given inflationary pressures, the Governing Council plans to raise interest rates by another 50 basis points at its next monetary policy meeting in March and it will then assess the next path of its monetary policy," the ECB said.
ING's head of global macro Carsten Brzeski said the ECB "opens the door to either a pause or a slower pace of rate hikes after March".
Before the decision, investors and economists expected the ECB to raise its deposit rate by another 50 basis points in March and take it to a peak of 3.25%/3.50% by the summer, which would be the highest since the turn of the century.
Today, the US Federal Reserve has begun to slow its own rate of hikes and admit that deflationary measures are underway, while reiterating that borrowing costs still need to rise further.
ECB President Christine Lagarde is expected to comment on the extent to which this decision is supported among Governing Council members and what it will take for the ECB to also start raising rates with smaller increases.
The ECB is also gradually reducing the trillion-euro bond stockpile it has accumulated over the past decade as it tries to boost inflation, which at the time was too low. The ECB said on Thursday that any proceeds from maturing bonds that are still reinvested will be "allocated in proportion to the redemption share".
