By George Glover
The European Central Bank raised interest rates on Thursday, a move that could foreshadow similar action from the Federal Reserve and other central banks as policymakers grapple with rising inflation.
The ECB hiked the deposit rate by a quarter of a point to 2.25% on Thursday, a decision that investors and economists were expecting.
Frankfurt hadn't raised borrowing costs since September 2023, but it is moving now to address price pressures. Euro-zone inflation climbed to 3.2% in May, driven higher by the Iran war.
Raising borrowing costs could help suppress inflation while giving policymakers more flexibility if price pressures continue to build.
The ECB decision ould give a glimpse of what's to come for U.S. markets as central bankers scramble to keep a lid on soaring prices.
"This is a significant moment," said Deutsche Bank's chief European economist Mark Wall. "Not only is this the first ECB hike since 2023, it is also the first hike by one of the major global central banks in response to the energy shock."
"The ECB is saying that a 'look through' strategy is not a robust response," Wall added.
Traders on Thursday were pricing in a 66% chance that the Fed raises rates at least once between now and the end of the year, according to the CME FedWatch tool.
Write to George Glover at george.glover@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
June 11, 2026 09:22 ET (13:22 GMT)
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