The European Central Bank has kept key interest rates unchanged despite record rises in inflation.
While the bank says that higher inflation will fade throughout the year, many economists are wondering whether consumer prices will remain high for much longer.
The latest decision comes as market participants have started pricing in the chances of two rate hikes by the ECB this year.The central bank's benchmark refinancing rate remains at 0%, the rate on its marginal lending facility sits at 0.25% and the rate on its deposit facility was kept at -0.5%. The lack of action comes at a time of increased pressure on the ECB. The 19-member region has seen inflation creep up month after month, with the most recent reading hitting a record 5.1% in January.
While the bank says that higher inflation will fade throughout the year, many economists are wondering whether consumer prices will remain high for much longer. A more prolonged period of higher inflation could put the ongoing economic recovery at risk.is set to explain the bank's latest monetary policy decision at 1.30 p.m. U.K. time.
The latest decision comes as market participants have started pricing in two rate hikes for the ECB this year. However, the central bank has tried to play down that possibility.
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