Soaring energy, food and fuel costs, and rising consumer prices have been cited as the European Central Bank (ECB) made the announcement it will raise interest rates for the first time in more than a decade.
The key interest rate is now 0.0 percent with ECB president, Christine Lagarde, suggesting a second hike could come in September. “The rate has been negative since 2014 in a bid to boost the region's economy after years of weak growth”, wrote BBC News. However, the Russian invasion of Ukraine and issues caused by the Coronavirus Pandemic have forced action.
Lagarde added: "Economic activity [in the Eurozone] is slowing. Russia's unjustified aggression towards Ukraine is an ongoing drag on growth. We expect inflation to remain undesirably high for some time owing to continued pressure from energy and food prices and pipeline pressures in the pricing chain.”
Sky News reports that the euro rose by nearly one percent against the dollar immediately after the news.
