After successive hikes of 75 basis points, the ECB lifted the deposit rate more slowly on Thursday, to 2%, as economists expected. Pledging to push borrowing costs “significantly” higher, officials widened efforts to tame prices with a decision to shrink their €5 trillion bond portfolio.
The ECB’s downshift on rate hiking, along with similar action this week by the Federal Reserve and the Bank of England, may reflect belief that the worst inflation in a generation — while not vanquished — is at least near its peak. “If you were to compare with the Fed, we have more ground to cover, we have longer to go,” Lagarde said.
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