ECB to increase interest rates by 50 basis points.

UniCredit's stock price falls after ECB announcement.

The European Central Bank (ECB) has announced that it will increase interest rates by 50 basis points, the largest increase in over a decade. The decision was made in an effort to combat rising inflation, which has reached a record high of 8.6% in the eurozone.

The ECB's decision was widely expected by markets, but the size of the increase was larger than some had anticipated. As a result, the euro strengthened against the US dollar and other major currencies.

UniCredit, Italy's largest bank, saw its stock price fall by more than 2% after the ECB's announcement. The bank is particularly sensitive to interest rate changes because it relies heavily on lending for its profits.

The ECB's decision is likely to have a significant impact on the eurozone economy. Higher interest rates will make it more expensive for businesses and consumers to borrow money, which could slow economic growth.

However, the ECB believes that raising interest rates is necessary to bring inflation under control. The bank has a mandate to keep inflation at 2%, and it believes that the current level of inflation is too high.

The ECB's decision is a sign that the bank is taking a more aggressive approach to fighting inflation. This is likely to lead to higher interest rates in the eurozone in the coming months.