The ECB hiked the benchmark rate in the euro area to 3.75%, which matches the highest rate since the launch of the euro currency in 1999. Borrowing costs were previously jacked up this high only in October 2000. “Inflation continues to decline but is still expected to remain too high for too long,” the central bank said in a statement.
European economy weakening Recent evidence suggests the euro area may be stuck in recession, bolstering the case for a pause. Demand for business loans fell to a record low in the second quarter, according to a survey published by the ECB Tuesday. The report also found that banks had tightened credit standards further across all loan categories. Separately, survey data released Monday showed that business activity in the eurozone contracted at the fastest pace in eight months in July.
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