Europe’s central banks raise interest rates to combat inflation.

On Thursday, central banks across Europe raised interest rates, some by shocking markets, and hinted at even higher borrowing costs to come in order to tame soaring inflation, which is eroding savings and squeezing corporate profits.

 

Inflation has spread to everything from food to services, with double-digit readings in some parts of the continent, initially fueled by soaring oil prices in the aftermath of Russia’s invasion of Ukraine.

 

Such levels have not been seen in some areas since the aftermath of the 1970s oil crisis.

 

The Swiss National Bank and the National Bank of Hungary both surprised markets with large rate hikes just hours after the Federal Reserve raised rates by the most in nearly three decades.

 

Meanwhile, the Bank of England raised borrowing costs by the quarter point that markets had predicted.

 

The moves come just a day after the European Central Bank agreed plans in an emergency meeting to contain borrowing costs in the bloc’s south so it could forge ahead with rates rises in both July and September.

 

‘We are in a new era for central banks, where lowering inflation is their only objective, even at the expense of financial stability and growth,’ George Lagarias, Chief Economist at Mazars Wealth Management said.