ECB Hikes Rates By A Quarter Percentage Point

The European Central Bank raised interest rates by a quarter of a percentage point Thursday, the smallest increase since it started hiking in July after data this week showed core inflation cooling and banks pulling back sharply on lending, Hanna Ziady reported for CNN.

Photo Insert: The ECB's decision comes a day after the US Federal Reserve increased rates by a quarter-point, and takes the benchmark rate across the 20 countries that use the euro to 3.75%.

The decision comes a day after the US Federal Reserve increased rates by a quarter-point, and takes the benchmark rate across the 20 countries that use the euro to 3.75%.

The ECB has now hiked borrowing costs at seven consecutive meetings since July in a bid to get inflation under control. “Headline inflation has declined over recent months, but underlying price pressures remain strong,” the ECB said in a statement.

“At the same time, the past rate increases are being transmitted forcefully to euro area financing and monetary conditions, while the lags and strength of transmission to the real economy remain uncertain,” it added.

Rising prices and higher interest rates have taken a toll on the region’s economy, which only narrowly avoided a recession in the first three months of the year.

While still some way off its highs, inflation in the euro area ticked up to 7% in April, from 6.9% in March, according to an initial estimate Tuesday from the EU statistics agency. The labor market has also tightened — unemployment dipped to 6.5% in March.

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