Eurozone braces for first interest rate rise since 2023 as ECB battles inflation – business live

Newsflash: the European Central Bank has increased borrowing costs across the eurozone for the first time since September 2023.

The ECB’s governing council voted to increase interest rates by a quarter of one percentage point.

Policymakers hiked borrowing costs after eurozone inflation rose to 3.2% last month, as the Middle East crisis pushed up energy costs.

double quotation mark The war in the Middle East is generating inflation pressures, and the decision to raise rates is robust across a range of scenarios mapping out how the shock might evolve and affect the medium-term outlook for the euro area.

This increases the rate on the ECB’s deposit facility , which banks can use to make overnight deposits with the Eurosystem, to 2.25% up from 2%.

The interest rate on the ECB’s main refinancing operations , which commercial banks use to borrow funds from the ECB, is going up to 2.4% from 2.15%.

And the rate on the marginal lending facility , which offers overnight credit to banks, rises to 2.65% from 2.4%.