Following the latest decision, the interest rate on main refinancing operations will be raised to 4.50 percent, on the marginal lending facility to 4.75 percent and on the deposit facility to 4.00 percent, the ECB announced Thursday.

"Inflation continues to decline but is still expected to remain too high for too long," the ECB said in its monetary policy decision release. "The Governing Council is determined to ensure that inflation returns to its 2 percent medium-term target in a timely manner." Its decision to raise interest rates again is aimed at reinforcing progress toward this target, the bank added.

ECB experts forecast the euro area to see average inflation of 5.6 percent in 2023, 3.2 percent in 2024 and 2.1 percent in 2025; this marks an upward revision for 2023 and 2024 and a downward revision for 2025. The upward revision for this year and next primarily reflects a higher path for energy prices.

In light of the increasing impact of tightening financing conditions on domestic demand and the weakening international trade environment, the central bank staff also significantly lowered its economic growth projections, now expecting the euro area economy to expand by 0.7 percent this year, 1.0 percent next year and 1.5 percent in 2025.

Lagarde: Majority agreed with rate hike

Speaking at a press conference Thursday, ECB President Christine Lagarde stressed that the decision to hike interest rates again was based on forecasts and analyses.

Lagarde said that there were members of the Governing Council who would have preferred not to move forward with the interest rate hike.

"I can say that it was a strong majority that agreed with the decision we made," she added.

Asked whether the interest rate hikes are now over, the ECB president referred to the wording of the central bank's announcement, which states that "the key ECB interest rates have reached levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to our target," and that "Our future decisions will ensure that the key ECB interest rates will be set at sufficiently restrictive levels for as long as necessary."

This marks the tenth time in a row that the ECB has decided to hike its interest rates.

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