By Geoffrey Smith
Investing.com -- The European Central Bank raised its key interest rates on Thursday for the first time in over 11 years, going beyond its own guidance as it tries to bring down inflation from record highs.
The ECB said it will raise the rate on its deposit facility, which provides the effective floor to euro money market rates, by 50 basis points to 0%, ending a nine-year experiment with negative official interest rates. The refinancing rate and the marginal lending rate will also rise by 50 basis points respectively to 0.5% and 0.75%.
The bank had said at its last meeting that it intended to raise the deposit rate by 25 basis points in July, with a larger hike possible in September depending on the progress of inflation. The annual rate of inflation in the Eurozone rose by more than expected to 8.6% in June, according to data released earlier this week by Eurostat, prompting an abrupt recalculation by the central bank.
ECB President Christine Lagarde will hold her regular press conference at 08:45 AM ET (1245 GMT), a quarter of an hour later than usual. In addition to explaining the bank's decisions, she's expected to update markets with details of its new 'Transmission Protection Instrument', which it also approved on Thursday. This is aimed at keeping volatility government bond markets within reasonable levels as it embarks on what may be a prolonged tightening of monetary policy.
The euro rose on the news, hitting $1.0260, a gain of 0.8% on the day.