For the first time since 2011..ECB hikes interest rates by 50 bps

The European Central Bank (ECB) raised interest rates for the first time in 11 years, joining the global rally to combat high inflation with an unexpectedly large 50 bps hike to 0.5% in July. A new September hike of more than 25bps is expected if inflation data does not respond to European tightening.

The interest rate on borrowing was also raised to 0, after it was -0.5%.

The decision at a meeting of the bank’s 25-member Board of Governors on Thursday also comes as the bank faces a difficult path forward: whether or not the rush to increase the cost of credit will push Europe into recession at the expense of fighting record inflation.