ECB makes historic interest rate move

The ECB is fighting rampant inflation in the euro zone with the biggest interest rate hike since the introduction of euro cash in 2002. On Thursday, Monetary watchdogs led by ECB chief Christine Lagarde decided to raise the key interest rate by an extraordinarily hefty 0.75 percentage points to 1.25 percent. “We have incredibly high inflation figures, we are off target in our forecast and we have to act,” Lagarde said, holding out the prospect of further rate hikes. This is the second tightening move in a row. In July, the ECB had initiated the interest rate turnaround and set key rates upward for the first time since 2011. In view of the energy crisis and high inflation, Lagarde expects the economy to slow down. “We expect the economy to weaken substantially over the rest of the year,” she said.