ECB hikes interest rate by 25bps to 3.75%

The European Central Bank (ECB) has raised its key interest rate by another 25 basis points. The decision comes as the Governing Council is of the view that the inflation remained too high despite easing somewhat recently.

Accordingly, the interest rate on main refinancing operations and interest rates on the marginal lending facility and the deposit facility will be increased to 3.75 per cent, 4.00 per cent and 3.25 per cent respectively with effect from MAY 10, 2023.

This marks a cumulative increase of 375 basis points since last year. 

Earlier, The ECB hiked rates by half a percentage in March.

In a statement, the bank had called the banking sector in the 20 countries using the euro currency resilient, with strong finances.

The bank said that it's monitoring current market tensions closely and stands ready to respond as necessary to preserve price stability and financial stability in the euro area.