Eurozone interest rates set to rise for first time in 11 years

The European Central Bank (ECB) has said it will raise interest rates for the first time in more than 11 years next month as it tries to control soaring inflation in the eurozone.

The ECB said it would raise its key interest rates by a quarter of a percentage point in July, with further hikes planned for later in the year.

The bank also intends to end its bond-buying stimulus programme on 1 July.

"High inflation is a major challenge for all of us. The Governing Council will make sure that inflation returns to its 2% target over the medium term," the ECB said in a statement.

The ECB's main policy interest rate is currently at -0.50% and it could be back at zero or above by the end of September, the bank said. The last time it raised interest rates in the eurozone was in 2011.

Inflation in May "again rose significantly" as energy and food prices surged, it added.

But it said inflationary pressures had "broadened and intensified, with prices for many goods and services increasing strongly".

As a result, the bank has upped its estimate for annual inflation this year to 6.8%, before slowing to 3.5% in 2023 and 2.1% in 2024.

The ECB also cut its growth forecast for the eurozone from 3.7% to 2.8% for 2022, and from 2.1% to 1.6% for 2023.