European Central Bank confirms July interest rate hike

By Gokhan Ergocun

ISTANBUL (AA) – The European Central Bank (ECB) on Thursday kept key interest rates unchanged, but confirmed it will go ahead with a hike in July for the first time in over a decade.

The bank also announced it will terminate its asset purchase program as of July 1.

“The Governing Council intends to raise the key ECB interest rates by 25 basis points at its July monetary policy meeting,” read a statement.

The bank’s benchmark refinancing rate remains at 0%, while interest rates on the marginal lending facility and deposit facility have been kept at 0.25% and minus 0.50%, respectively.

Inflation rose sharply in May as energy and food prices surged due to the ongoing Russia-Ukraine war, the ECB said.

“The new staff projections foresee annual inflation at 6.8% in 2022, before it is projected to decline to 3.5% in 2023 and 2.1% in 2024 – higher than in the March projections,” the statement said.