The European Central Bank raised interest rates Thursday for the first time in 11 years by a larger-than-expected amount, joining steps already taken by the US Federal Reserve and other major central banks to target stubbornly high inflation.
The move raises new questions about whether the rush to make credit more expensive will plunge major economies into recession at the cost of easing prices for people spending more on food, fuel and everything in between.
The ECB's surprise hike of half a percentage point for the 19 countries using the euro currency is expected to be followed by another increase in September, possibly of another half a point. Bank President Christine Lagarde had indicated a quarter-point hike last month.
The bigger hike was justified by an "updated assessment of inflation risks," the ECB said, and means the bank leaves an era of negative interest rates.
"Economic activity is slowing. Russia's unjustified aggression towards Ukraine is an ongoing drag on growth," Lagarde said at a news conference.