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- The European Central Bank hiked its deposit rate by 50 basis points Thursday as it keeps battling inflation.
- Policymakers plan to make the same-size hike at the next monetary policy meeting in March.
- The ECB is battling soaring inflation in Europe driven in part by Russia's war in Ukraine.
The European Central Bank raised interest rates by another 50 basis points Thursday as it pushes ahead with efforts to cool inflation without crushing the eurozone economy.
The ECB's governing council hiked its main deposit rate by 50 basis points, or 0.5 percentage points, taking it to 2.5%. It signaled that it plans to bring in a similarly-sized increase at its next meeting in March.
Policymakers started hiking interest rates from a record low of -0.5% in July, lifting the cost of borrowing for the first time in 11 years.
ECB president Christine Lagarde said in a press conference after the decision that the central bank doesn't believe it's yet got inflation down to where it wants, despite a recent cooling – and she signaled it will press ahead with aggressive rate hikes.
"I get it, headline inflation has gone down," she told reporters. "But underlying inflation pressure is there, alive and kicking, which is why we are committing as we intend in this monetary policy statement, and this is why I say we have more ground to cover and we are not done."
It has raised rates five times since then as it tries to bring down high levels of inflation, which spiked across Europe after Russia's invasion of Ukraine drove up the price of key commodities like crude oil and natural gas.
Investors had anticipated the 50-point hike, but were spooked Wednesday when Spain released a Consumer Price Index report that showed inflation had jumped by a hotter-than-expected 5.8% in January.
The euro was broadly unchanged at just under $1.10 after the bank's announcement, while the flagship Stoxx 600 index edged up 0.36%.
"It's a tricky balancing act for the ECB," BRI Wealth Management portfolio manager Tom Hopkins said after the announcement. "Inflation needs to come down to relieve the cost-of-living pressures, but the economy is slowing, and businesses are being impacted by struggling to find affordable credit."