LONDON, July 21 (Reuters) - The European Central Bank raised interest rates by more than expected on Thursday, confirming that concerns about runaway inflation trump economic growth considerations for now.
The ECB raised its benchmark deposit rate by 50 basis points to 0%, breaking its own earlier guidance for a 25 basis point move as it joined global peers in jacking up borrowing costs. It was the euro zone central bank’s first rate hike for 11 years. read more
MARKET REACTION:
The euro rose around 0.7% after the European Central Bank decision. European stocks were volatile after the rate decision. Government bond yields climbed with yields on 10-year German benchmark debt at their highest levels in three weeks.
COMMENTS:
JOHN DOYLE, VICE PRESIDENT OF DEALING AND TRADING, MONEX USA:
“The decision by the ECB to raise rates by 50 bp instead of 25 bp is not a total surprise especially after comments made earlier in the week. We viewed it as a “toss up”.
“The knee-jerk reaction for Euro strength is the correct one as today’s move slightly closes the gap in policy between the ECB and the U.S. Fed.”
