business news

Europe’s central banks jack up interest rates to fight inflation surge

Europes central banks jack up interest rates

Central banks across Europe raised interest rates on Thursday, with some pointing to even higher borrowing costs in shocking amounts to rein in rising inflation eroding savings, and squeezing corporate profits.

Initially fueled by soaring oil prices after Russia invaded Ukraine, inflation spread to everything from food to services, with double-digit readings in parts of the continent.

The Swiss National Bank and the Hungarian National Bank caught markets off guard with big strides to the upside, just hours after their US counterparts pushed the Federal Reserve’s biggest rate hike in almost three decades.

Meanwhile, the Bank of England increased borrowing costs by the quarter-point expected by the markets.

The moves come just a day after the European Central Bank agreed on plans to continue rate hikes in both July and September in an emergency meeting to contain borrowing costs in the south of the bloc.

We are in a new era for central banks, where lowering inflation is their only objective, even at the expense of financial stability and growth, George Lagarias, Chief Economist at Mazars Wealth Management said.

Comment here