Euro Area Interest Rate

European Central Bank policymakers agreed that the central bank should continue normalizing and tightening monetary policy to combat high inflation, even in the event of a shallow recession, the accounts of the central bank's October policy meeting showed. Officials noted that the inflation outlook continued to worsen, with inflation far too high and repeatedly above the projected figures, and that there was an increasing risk that it might become entrenched and that second-round effects and a wage-price spiral could emerge. Still, the central bank suggested that it might want to pause the ongoing interest rate hikes if there was a prolonged and deep recession, which would be likely to curb inflation to a larger extent. In October, the ECB raised its key interest rate by 75 bps, bringing borrowing costs to the highest since early 2009, and there was broad support for a meeting-by-meeting, data-dependent approach to taking future monetary policy decisions.