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 real focus of this week's meeting is on what communication may convey about future policy moves," said Citi analyst Arnaud Marès, who expects the central bank to hike again at its next meeting in July.
"We cannot rationally justify a pause when a Governing Council driven by an insurance motive now faces a substantially worse inflation outlook than in March," he added.
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.
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
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(END) Dow Jones Newswires
June 11, 2026 08:15 ET (12:15 GMT)
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