Europe has edged closer to recession as the European Central Bank (ECB) raised interest rates by 0.75%, making borrowing and repaying debt more expensive.
The ECB has lifted its main interest rate to the highest in more than a decade to tackle record inflation in the eurozone, which stood at 9.9% in September.
Borrowing and repaying debt will now be more expensive in the 19 countries using the euro.
The increase had been projected as the central bank battles to bring inflation down to its 2% target.
The deposit interest rate has doubled to now 1.5%.
Thursday’s rate hike was the third one this year as the ECB already raised rates at the fastest pace on record. Rates rose 0.5% in July and 0.75% in September.
The ECB is just one of the western central banks ramping up rates. It follows similar moves by the Bank of England and the US Federal Reserve who are all fighting to bring down inflation.
Rising borrowing costs have been met with displeasure from some politicians including the new Italian Prime Minister Giorgia Meloni.
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Markets had priced in the predicted policy move and European shares had fell in advance on Thursday morning.
A survey of economists has shown that the deposit rate is expected to reach 2.5% by next March.
