(VOVWORLD) - The European Central Bank on Thursday announced a new rate increase of a quarter percentage point, bringing its main rate to 3.75%, the highest rate since May 2001. This is the 9th consecutive interest rate increase of the bank in its yearlong campaign to stamp out high inflation.
ECB President Christine Lagarde said inflation continues to decline but is still expected to remain too high for too long. Inflation came down further in June, reaching 5.5%, half the peak of 10.6% recorded in October last year. This figure still far exceeds the ECB's target of stabilizing inflation at 2% over the medium term.
The ECB acknowledged that the effects of prolonged interest rate increases could be seen in credit demand being at its lowest level in 20 years, at a time when businesses are in need of capital to promote the green economy and digital transformation.
The ECB's interest rate increase came one day after the US Federal Reserve (FED), for the 11th time since March of last year, raised interest rates a quarter percentage point, bringing the prime interest rate to 5.5%, the highest rate since 2001.