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- Hezbollah drone strike kills four, wounds dozens at Israeli base
- China says launches military drills around Taiwan
- Stewart leads Liberty past Lynx to level WNBA Finals
- England return to winning ways in Nations League, Austria thrash Norway
- UN chief says attacks on UNIFIL 'may constitute a war crime'
- Ravens outlast Commanders while Bucs batter Saints in NFL
- Dozens hurt in Israel as Hezbollah claims drone strike
- England deserve 'world class' coach: Carsley
- Burkina Faso win to become first qualifiers for 2025 AFCON
- AC Milan's Pulisic among five out for USA match in Mexico
- France's Amandine Henry retires from international football
- Centre-left set to win pro-Ukraine Lithuania's vote
- India's World Cup hopes in Pakistan hands after Australia defeat
- Zelensky says NKorea sending troops to Russian army
- England beat Finland to get back on track
- King and Lewis propel West Indies to T20 triumph over Sri Lanka
- Pre-Halloween 'Terrifier' lands atop North America box office
- 'I still plan to compete and play next season,' says Djokovic
- Harris, Trump seek advantage in knife-edge election battle
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- Kamindu and Asalanka power Sri Lanka to 179 against West Indies
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- Spain send injured Yamal home 'to prioritise player's health'
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- Race four abandoned after New Zealand breeze into 3-0 lead in America's Cup
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- Netanyahu tells UN to move Lebanon peacekeepers out of 'harm's way'
- Bangladeshi Hindus defy attack worries to celebrate festival
- Kiwis three up in America's Cup as Ineos pay for time penalty
- In a first, SpaceX 'catches' megarocket booster after test flight
- Dominant England crush Scotland at Women's T20 World Cup
- Dropped: The rise and fall of Pakistan batting maestro Babar Azam
- Israel fights Hezbollah on the ground, pounds Lebanon from the air
- Sabalenka outlasts local hero Zheng to win third Wuhan Open title
- Bangladeshi Hindus shrug off attack worries to celebrate festival
- Former Pakistan captain Azam dropped for second England Test
- 'Opportunist' Dupont dazzles on Toulouse return
- Australia replace injured Vlaeminck with Graham at Women's T20 World Cup
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- China's Yin has 'goosebumps' as she romps to LPGA win in Shanghai
- Pakistan to re-use Multan pitch for second England Test
- Blair and King Charles hail Salmond's 'devotion' to Scotland
- Vietnam, China hold talks on calming South China Sea tensions
- SpaceX will try to 'catch' giant Starship rocket shortly before landing
ECB begins inflation fightback with July rate hike
The European Central Bank on Thursday said it would raise interest rates for the first time in over a decade next month to combat runaway inflation, bringing the curtain down on the eurozone's era of cheap money.
ECB governors, exceptionally meeting in Amsterdam instead of Frankfurt, provided markets with an unexpectedly precise statement setting out their path to monetary policy normalisation after years of ultra-low rates and easy credit.
As a first step, the ECB said it would end its massive bond-buying stimulus as of July 1.
The bank's governing council then plans "to raise the key ECB interest rates by 25 basis points" at its next meeting on July 21, the ECB said in a statement.
It will raise rates again in September, with the size dependent on the economic outlook.
The last time the ECB hiked rates was in 2011.
"The ECB officially ends its long era of unconventional monetary policy," said ING bank economist Carsten Brzeski.
Pressure had been growing on the ECB to take tough action after other major central banks like the US Federal Reserve and the Bank of England already moved to rein in prices with aggressive rate hikes.
Inflation in the 19-nation euro area rose to a record 8.1 percent in May, well above the ECB's two-percent target.
The surge has largely been driven by the war in Ukraine, which has pushed up the cost of energy, food and raw materials around the globe.
The ECB lowered its eurozone economic growth forecast while raising its projections for inflation.
"High inflation is a major challenge for all of us," the ECB said in a statement.
Attention now shifts to ECB chief Christine Lagarde's afternoon press conference, where she will be grilled about the ECB's next moves.
- 'Dampened growth' -
The biggest challenge facing Lagarde right now is finding the right balance between raising borrowing costs to cool inflation, without jeopardising the eurozone's already stuttering economy.
Underscoring those worries, the ECB slashed its growth outlook for the 19-nation club to 2.8 percent in 2022 and 2.1 percent in 2023, from 3.7 and 2.8 percent previously.
The war in Ukraine "is disrupting trade, is leading to shortages of materials, and is contributing to high energy and commodity prices," it said, adding that "these factors will continue to weigh on confidence and dampen growth, especially in the near term."
The July 1 end of its bond-buying scheme will draw a line under the last in a series of debt-purchasing measures worth a total of around five trillion euros ($5.4 trillion) since 2014.
Scrapping the scheme paves the way for what Lagarde has called a "lift off" in rates.
Of the ECB's three main rates, the so-called deposit rate currently stands at minus 0.5 percent -- meaning lenders pay to park excess cash at the bank.
Lagarde has said the ECB aims to exit eight years of negative rates by the end of September.
"Today's decision shows it's managed to find a compromise between the doves and the hawks," Brzeski said.
"A 50 basis point rate hike in July seemed to be fended off by opening the door for 50 basis points in September."
- Strong labour market -
The size of September's hike will depend to a large extent on how the outlook for the economy changes.
Despite unveiling a downgraded forecast for economic growth on Thursday, the ECB expressed optimism over the longer term outlook.
"Once current headwinds abate, economic activity is expected to pick up again," it said.
"The conditions are in place for the economy to continue to grow on account of the ongoing reopening of the economy, a strong labour market, fiscal support and savings built up during the pandemic."
On inflation, the ECB said it expected consumer prices to soar to 6.8 percent in 2022, up from 5.1 percent in its previous forecast.
Inflation is seen easing to 3.5 percent in 2023 and 2.1 percent in 2024 -- both also higher than earlier estimates.
"These projections indicate that inflation will remain undesirably elevated for some time," it said.
S.Gregor--AMWN