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ECB rate rise almost certain as inflation hits 4%


ECB rate rise almost certain as inflation hits 4%


Euro zone inflation jumped to a new record high of 4% in June. That was higher than economists had been expecting and makes it all but certain that the European Central Bank will put up interest rates by a quarter of a percentage point this week despite slower growth in the region.

The 4% year-on-year figure released by the EU statistics office Eurostat is a leap from May’s 3.7%.

European Commission spokeswoman Amelia Torres explained their concerns: “The current inflation levels are uncomfortably high for the euro area, as in fact they are for the rest of Europe and for very much the rest of the world. What is important … is to ensure that those inflationary expectations do not become entrenched – and to avoid at all costs a wage-price spiral – which would have very damaging consequences for our economies and for citizens in general.”

Even before the release of these inflation figures, ECB officials had given clear signs they would increase the cost of borrowing by a quarter percentage point to 4.25% at their monthly meeting on Thursday. But over the weekend, ministers from Germany, Spain and France warned the ECB against taking any measures that could further slow down the economy.

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