ECB raises interest rates 25 basis points, matching forecasts

ECB raises interest rates 25 basis points, matching forecasts

Rates on main refinancing operations, marginal lending facility, deposit facility to be increased to 4.25%, 4.50% and 3.75%, respectively

By Tuba Ongun

ANKARA (AA) - The European Central Bank on Thursday hiked its three key policy interest rates by 25 basis points, in line with market forecasts.

Though inflation is falling, it is projected to remain "too high for too long," the bank said in a statement.

The rate on the main refinancing operations was raised to 4.25%, the highest since October 2008.

The deposit facility rate hit a 22-year high of 3.57% and the marginal lending facility rate 4.50%, with effect next week, on Aug. 2.

This was the ninth consecutive rate hike since the onset of the ECB's monetary tightening cycle in 2022.

The bank stressed that interest rates will be set at "sufficiently restrictive levels" for as long as necessary to achieve a timely return of inflation to the 2% medium-term target.

"The Governing Council will continue to follow a data-dependent approach to determining the appropriate level and duration of restriction," it noted.

According to flash estimates released in July, the euro area annual consumer inflation rate dropped to a 17-month low of 5.5% in June, led mainly by declining energy prices.

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