The European Central Bank, the Swiss Central Bank and the Bank of England all raised interest rates by half a percentage point, after three-quarters-of-a-point increases at previous meetings, in an effort to tame inflation. Each central bank stressed that it was in a continuous battle against stubbornly high inflation, New York Times reports.
In the eurozone, “interest rates will still have to rise significantly at a steady pace” to make sure they are restrictive enough to return inflation to the central bank’s 2 percent target in a “timely” manner, the E.C.B. said in a statement yesterday. Most members of the Bank of England’s rate-setting committee said they expected that more increases would be needed to curb inflation.
The longer-term picture is more complicated: Europe’s economies are decelerating because of high energy costs and the effects of months of rate increases, which have made mortgages and other loans more expensive. Policymakers have been trying to calibrate the right amount of monetary tightening needed to bring down inflation despite the economic slowdown.
The Bank of England started raising rates a year ago and, over the course of nine consecutive policy meetings, has lifted rates from 0.1 percent to 3.5 percent, the highest since 2008. Consumer prices in Britain rose 10.7 percent in November from a year earlier, down slightly from 11.1 percent in October, the highest annual rate since 1981.
British nurses went on strike yesterday for the first time in the 74-year history of the country’s health service.