The European Central Bank lifted interest rates by a half-point and pledged that borrowing costs will rise by that amount again next month to ensure retreating inflation arrives back at target, Bloomberg reports.
Policymakers, as expected, raised the deposit rate to 2.5%, the highest since 2008. They warned that the most aggressive bout of monetary tightening in ECB history isn’t done — even as energy prices plunge and the Federal Reserve moderates the pace of its own hikes.
“The Governing Council intends to raise interest rates by another 50 basis points at its next monetary policy meeting in March,” the ECB said in a statement. “It will then evaluate the subsequent path of its monetary policy.”
Alongside its commitment on rates, the ECB also gave more details on how it intends to shrink its €5 trillion ($5.4 trillion) bond portfolio, reaffirming a monthly cap of €15 billion between March and June on maturing debt that’s allowed to expire.