The rate of interest within the 20 Eurozone international locations has been hiked to a greater than 20-year excessive.

The European Central Bank has elevated its benchmark fee to three.5%, up 0.25 proportion factors, making borrowing costlier because it stated inflation has been "too high for too long".

In new forecasts launched by the regulator it stated it is going to be two extra years earlier than inflation is introduced all the way down to its 2% goal.

Latest figures present inflation was 6.1% within the international locations utilizing the euro and can solely fall to five.1% this 12 months and three% in 2024.

It's nonetheless decrease than the UK rate of price increases which stands at 8.7%.

The financial space was in recession over winter. Last week, revised data from the European statistics workplace, Eurostat, confirmed the eurozone financial system contracted 0.1% within the first three months of this 12 months and the ultimate three months of 2022.

At the identical time because the financial system was stagnating, wages have been rising. Pay per worker elevated 5.2% within the first three months of the 12 months and 4.8% within the closing three months of 2022, ECB information confirmed.

Growth will stay weak all through this 12 months, it ECB stated.

The ECB is simply one of many central banks internationally rising charges to depress financial exercise and produce down hovering inflation.

On Wednesday the US Federal Reserve held rates after ten consecutive rises and within the UK the Bank of England is projected to convey its base fee to 4.5% subsequent Thursday.

Inflation started to extend as COVID-era provide chain issues pushed costs up and Russia's invasion of Ukraine precipitated vitality costs to succeed in file highs.