ECB Hikes Interest Rates to 3.5% to Combat High Inflation in Eurozone

The European Central Bank (ECB) has increased the interest rate in the 20 Eurozone countries to a more than 20-year high of 3.5%, up 0.25 percentage points, to combat high inflation.

Inflation has been at 6.1% in the countries using the euro and is projected to fall to 5.1% this year and 3% in 2024.

The ECB has signaled that rates will continue to increase, with a 70% chance of a rate hike in July.

The economic area was in recession over winter, with the eurozone economy contracting 0.1% in the first three months of this year and the final three months of 2022.

However, pay per employee increased 5.2% in the first three months of the year and 4.8% in the final three months of 2022, according to ECB data.

The Bank of England raised its base rate by 0.25 percentage points to 4.5% last month, and the US Federal Reserve held rates after ten consecutive rises.

In the UK, the Bank of England is projected to bring its base rate to 4.75% next Thursday.