The European Central Bank raised its benchmark interest rate for the fifth time in a row at its policy meeting ending today, Thursday (2/2/2023). The European Central Bank (ECB) decided to raise its benchmark interest rate by 50 basis points to 3 percent. In addition, the central bank also hinted at a further rate hike of the same magnitude at its meeting in March. Meanwhile, the ECB also raised the loan facility interest rate to 2.5 percent from the previous 2 percent. The ECB has raised its benchmark interest rate by 3 percentage points in the last seven months to fight inflation, in the hope that high rates will dampen demand and prevent further price growth. The ECB's decision follows similar steps from the Federal Reserve (The Fed) which raised its benchmark interest rate by 25 basis points. However, the ECB did not follow the Fed in clearly hinting at a slowdown in the pace of policy tightening. "The Policy Council will remain on track in raising interest rates significantly at a steady pace," the ECB said in a statement. The ECB added that it will raise interest rates by another 50 basis points at its next monetary policy meeting in March and will then evaluate the next path of monetary policy. Differences of opinion among central bank officials over the outlook for interest rates have widened in recent weeks as economic data offered no clarity on whether to support interest rate hikes. Slower signals from the Fed suggest that the ECB's window of opportunity may close sooner than previously thought. So far, the market has embraced the hawkish argument, especially as conservative policymakers have been in the majority for most of the last year. Markets are still pricing in a full percentage point hike in interest rates after today's decision. However, policy makers say that headline inflation is already 2 percentage points below its peak, while the rapid decline in natural gas prices suggests inflation will fall further.