The European Central Bank stuck with its plan to hike interest rates by half a percentage point Thursday, judging that inflation poses a bigger threat to the economy than turmoil in the banking sector. But the ECB said it was keeping a close watch on “current market tensions” and “stands ready to respond as necessary to preserve price stability and financial stability in the euro area.
“Inflation is projected to remain too high for too long,” the ECB said Thursday, adding that core inflation — excluding volatile energy and food prices — continued to increase in February. At 8.5%, inflation in the euro area last month was far above the central bank’s 2% target. And data Wednesday showed a stronger than expected increase in industrial production across the euro area.
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