The benchmark European Central Bank deposit rate is now 3.25%. The last time it was this high was October 2008.
It's also the seventh successive rate increase since the ECB began to raise rates last summer.
But it won’t be the last.
The key sentence in the ECB’s statement today was this: "Our future decisions will ensure that the policy rates will be brought to levels sufficiently restrictive to achieve a timely return of inflation to our 2% medium-term target and will be kept at those levels for as long as necessary."
That indicates there are more than one additional interest rate increases on the cards. And, whenever the ECB decides to call a halt, rates will be held at this elevated level until inflation starts to come down much closer to the target level of 2%.
Inflation is currently at 7% across the euro area.
The ECB’s forecast for euro area inflation, published in March, had it averaging at 2.9% next year and 2.1% in 2025. So, that suggests another year or so of rates at this level.
ECB President Christine Lagarde rammed home the message of unfinished business.
She said the ECB had "more ground to cover" and was "continuing the process," describing bringing inflation down as a journey where it hadn’t "arrived yet".
Financial markets have factored in another half a percentage point increase in ECB rates, which could come in two more quarter point increases. Much will depend on various releases of prices and financial data over the coming weeks.
The ECB also had two tough messages that will resonate here.
The first was to euro area governments which they encouraged to "roll up" cost-of-living supports or risk stoking inflation further, leading to even higher interest rates.
The other message was to households across the euro area struggling under higher interest rates. Christine Lagarde said the Bank could not alleviate this pain and the best it could offer was to "tame inflation in a timely manner".
"Our task is price stability. Our task is to reduce inflation," said Lagarde, who said interest rates were the best tool to do this.
It was admirably direct, but probably won’t win many hearts.
Inflation makes people poorer. Worse still, trying to recover from inflation makes people poorer.
It also leads to a fractious debate when different groups of workers, business owners, farmers, fixed and floating mortgage holders, savers and pensioners all have arguable cases they’re the ones being hard done by.
That’s why this whole debate is really all about inflation, not interest rates, and why bringing it down is urgent not just for economies but for societies.
