ECB slows pace of rate hikes, keeps options open
STORY: The European Central Bank raised interest rates by 25 basis points to 3.25% as expected on Thursday (May 4) and said it would stop reinvesting cash from maturing debt in its 3.2 trillion euro Asset Purchase Programme from July.
The central bank for the 20 countries that share the euro has now lifted rates by a combined 375 basis points since last July, its fastest pace of tightening, but further action is still likely given mounting wage and price pressures.
The rate hike, a slowdown after three consecutive 50 basis point increases, comes only days after euro zone banking data showed the biggest drop in loan demand in over a decade. That suggests previous rate rises are working their way through the economy and that ECB policies are now restricting growth.
The bank, however, provided no guidance on future moves.
