Europe’s central bank backs larger-than-expected rate hike

By DAVID McHUGH
AP Business Writer

FRANKFURT, Germany (AP) — The European Central Bank has raised interest rates for the first time in 11 years by a larger-than-expected amount. It’s joining steps already taken by the U.S. Federal Reserve and other major central banks to target stubbornly high inflation. The ECB’s surprise hike Thursday of half a percentage point for the 19 countries using the euro currency is expected to be followed by another increase in September. Bank President Christine Lagarde says the forecasts don’t point to a recession this year or next but acknowledged the uncertainty ahead. The move raises new questions about whether the rush to make credit more expensive will plunge major economies into recession at the price of fighting inflation.