Eurozone inflation hits fresh record high heaping more pressure on ECB to move quicker

Prices are rising at the fastest rate on record in the Continent in a further sign the European Central Bank (ECB) will have to rein in policy quicker than expected.

Inflation among the bucket of countries using the euro climbed to 5.9 per cent last month, up marginally from 5.8 per cent in January, the highest reading since the currency was created in 1999.

The ECB last week left interest rates in negative territory, where they have been for several years.

The central bank did announce its bond buying programme would be withdrawn much quicker than first planned as President Christine Lagarde and co scramble to tighten policy to tamp down on the soaring cost of living in the bloc.

The ECB’s more relaxed attitude to inflation runs against the mood music at the US Federal Reserve and the Bank of England.

The Fed yesterday hiked rates for the first time since 2018, while the Bank became the first big central bank to lift borrowing costs at its December meeting. 

Threadneedle Street also lifted rates at successive meetings for the first since 2004 in February.

The Bank is expected to raise borrowing costs 25 basis points once again today, taking them to pre-pandemic levels of 0.75 per cent.