European Central Bank surprises markets with biggest interest rate rise in 20 years

‘Inflation continues to be undesirably high’, says Christine Lagarde

The European Central Bank increased interest rates for the first time in 11 years on Thursday in an attempt to cool inflation in the eurozone.

It raised rates by 50 basis points to 0pc – its biggest rise since 2000 – raising fresh fears that major economies could be plunged into recession at the cost of easing prices for households on food, fuel and everything in between.

The ECB’s surprise hike for the 19 countries using the euro currency is expected to be followed by another increase in September, possibly of another half a point. Bank president Christine Lagarde had indicated a quarter-point hike last month.