(VOVWORLD) - The European Central Bank raised its key interest rate to a record high of 4% on Thursday but, with the euro zone economy in the doldrums, signaled that the hike, its 10th in a 14-month-long fight against inflation, was likely to be its last.
The central bank for the 20 countries that share the euro also raised its forecasts for inflation, which it now expects to come down more slowly towards its 2% target over the next two years, while cutting those for economic growth.
That illustrated the dilemma ECB policymakers had faced: prices are still rising at more than twice the target rate but with high borrowing costs and a downturn in China, overall economic activity is struggling.
Against this backdrop, the ECB sent a message that its rate hikes were probably at a end, prompting euro zone bond yields and the euro to fall and European shares to rise as investors bet that it would start cutting rates next year.