The European Central Bank raised interest rates for the ninth straight time in its yearlong campaign to stamp out painfully high inflation, coming as worries about recession fuel speculation that Thursday's hike could be its last.
ECB President Christine Lagarde had all but promised the quarter-percentage point increase and left the door open to future hikes, saying data would determine one decision to the next.
The ECB move followed a decision by the U.S. Federal Reserve on Wednesday to raise its key rate for the 11th time in 17 months. Fed Chair Jerome Powell was noncommittal about whether more rate increases might be coming, though inflation is lower in the U.S. -- at 3% -- than it is in Europe. Rates are working their way through the economy, weighing on home prices and construction activity, and are designed to work so people spend less and prices come down. But they can also weigh on economic growth, and the eurozone already has seen back-to-back quarters of contraction.
"The ECB is again running the risk of being behind the curve. This time not by being too benign on inflation but rather by being too optimistic and too benign on the economic impact of its own policy measures," he said. Fears about recession are focusing on Germany, Europe's industrial powerhouse and largest economy. It is the only developed economy that the International Monetary Fund expects to shrink this year.'Germany already has recorded two straight quarters of falling economic output, meeting one definition of recession. A third is possible, with figures for the April-to-June period coming out Friday.
France Dernières Nouvelles, France Actualités
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