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European Central Bank faces pressure from record inflation

AP – The head of the European Central Bank (ECB) dropped more hints yesterday about when the bank will start raising interest rates, with pressure increasing to follow the United States (US), United Kingdom (UK) and other countries in taking a harder line to combat soaring consumer prices.

People in the 19 countries that use the euro currency have seen costs increase for everything from food to fuel as inflation rose to an annual rate of 7.5 per cent last month, the highest since statistics began in 1997.

Driven by energy prices that have soared ever higher since Russia invaded Ukraine, record inflation has sharpened attention on when the ECB will take more drastic steps to control excessive price increases for consumers. President Christine Lagarde opened the door a crack for an interest rate increase later this year during a news conference following last month’s meeting, when the bank said it will speed up ending its pandemic stimulus efforts.

That’s key to interest rate decisions because the bank has promised a rate hike will only follow the end of bond purchases.

The war in Ukraine has sent inflation surging to unexpectedly high levels.

Prices for oil and gas have been rising on fears of a cutoff from Russia, which is the world’s largest oil exporter, and as the recovery from the COVID-19 pandemic increases demand for fuel.