European stocks closed lower on Thursday after the European Central Bank raised borrowing costs as expected and signaled further tightening of monetary policy to curb sustained inflation.
The pan-European Stoxx 600 closed down 0.1% after falling 0.8% earlier in the session.
The European Central Bank raised its deposit rate by 25 basis points to 3.5%, the highest level in 22 years. This is the ECB’s eighth consecutive rate hike. Eurozone inflation was 6.1%, more than three times the ECB’s target of 2%, according to Reuters.
“This was quite expected, given that (ECB President Christine) Lagarde had already said two weeks ago that interest rates would need to be raised even more to bring the CPI back to its target,” said Stuart Cole of Equity Capital.
The banking sector index fell 0.8%, while the technology sector index fell 0.6%. Both are quickly affected by changes in interest rates.
Health care shares rose 0.4%.
H&M shares jumped 3.7% after the Swedish fashion group posted a good start to June.
The retail sector index rose by 0.3%.
