FRANKFURT, July 21 (Reuters) - The European Central Bank raised interest rates by a bigger than expected 50 basis points on Thursday, confirming that concerns about runaway inflation now trump growth considerations.
The ECB also approved a new bond purchase scheme called Transmission Protection Instrument (TPI) intended to cap the rise in more indebted members' borrowing costs and limit financial fragmentation.
Following are highlights of ECB President Christine Lagarde's comments at a news conference after the policy meeting.
RETURN TO TARGET
"Looking further ahead, in the absence of new disruptions, energy costs should stabilize and supply bottlenecks should ease, which, together with the ongoing policy normalization, should support the return of inflation to our target."
MORE ON INFLATION
"Risks to the inflation outlook remain on the upside and have intensified particularly in the short term."
INFLATION UNDESIRABLY HIGH
"We expect inflation to remain undesirably high for some time owing to continued pressure from energy and food prices and pipeline pressures in the pricing chain. Higher inflation pressures are also stemming from the depreciation of the euro exchange rate."
PRICE PRESSURES SPREADING
"Price pressures are spreading across more and more sectors, in part owing to the indirect impact of high energy costs across the whole economy."
STRONG LABOUR MARKET
"Economic activity continues to benefit from the reopening of the economy, from a strong labour market, and from fiscal policy support. In particular, the full reopening of the economy is supporting spending in the services sector."
Q3 TOURISM BOOST
"As people start to travel again, tourism is expected to help the economy in the third quarter of this year."
"Firms continue to face higher costs and disruptions in their supply chains, although there are tentative signs that some of the supply bottlenecks are easing."
"Taken together, these factors are significantly clouding the outlook for the second half of 2022 and beyond."
"Economic activity is slowing. Russia's unjustified aggression towards Ukraine is an ongoing drag on growth. The impact of high inflation on purchasing power, continuous supply constraints, and higher uncertainty are having a dampening effect on the economy."
(Reuters Global News Desk)