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The European Central Bank will raise interest rates for the first time in 11 years on Thursday, a major move as lawmakers fear they will lose control of rising consumer prices.
With inflation already approaching double digits, the EU economy is suffering from the impact of Russia’s war in Ukraine.
But European governments appear far from united on how quickly the ECB should move, with some arguing that it is already a long way behind the curve, especially compared to global peers such as the US Federal Reserve, while others point to an imminent recession that threatens the ECB.
The bank had until recently signaled a 0.25 percent hike would be followed by a bigger move in September, but sources told Reuters a 0.5 percent hike would also be on the table on Thursday as the inflation outlook is deteriorating rapidly.
Complicating the decision, the euro’s recent fall to a two-decade low against the dollar also adds to pressures, adding to doubts about a higher rate, even if that ultimately hurts growth.
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