The European Central Bank chugged ahead with another outsized interest rate hike Thursday and vowed more to come, underlining its drive to subdue inflation even as the European economy slows and the U.S. Federal Reserve eases its pace of increases.
The Frankfurt-based bank raised its key benchmarks by half a percentage point and said it intends to make a similar move in March. Policymakers are moving aggressively to choke off price spikes that have slowed from record highs but are still hurting households in the 20 countries that use the euro currency.
The Bank of England also went big Thursday with a half-point hike, but the Fed pulled back a day earlier, slowing to a quarter-point hike as central banks around the world reassess their approach to tackling price spikes that have started to slow. The ECB's bigger moves compared to the Fed partly reflect a later start in raising rates in July, four months after the U.S. central bank made its first increase, and from lower levels. That means more ground to make up.
Inflation is one of the key factors holding back economic growth, robbing consumers of spending power as higher food and energy prices consume their paychecks. European governments have passed billions in relief to shield people from high natural gas prices, which have fallen from all-time highs during the summer as Europe found other suppliers and warmer-than-expected winter weather reduced the chance of shortages and rationing. But they're still three times higher than when Russia massed troops on the border with Ukraine.
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