On Thursday, the European Central Bank confirmed that it will raise interest rates next month at its policy meeting and downgraded growth projections.

The Governing council announced at its most recent monetary policy meeting that they intend to increase their key interest rates 25 basis points during its July meeting and anticipates a further rise at the September meeting.

According to the ECB’s statement, Thursday’s announcement stated that the Governing Council believes that a sustained but steady increase in interest rates is appropriate beyond September.

According to the Governing Council’s commitment to its 2% medium term target, the pace of which it adjusts its monetary policies will be determined by the incoming data as well as how it evaluates the development in inflation.

Inflation in consumer prices across all 19 euro zone members annually hit a fresh record high of 8.1% in MayHowever, in previous guidance from the ECB it stated that a first rate rise would not occur until July 1, when the formal end to its net asset purchase program was completed.

The meeting at Amsterdam, Thursday’s Governing council’s first in Amsterdam since the outbreak of the coronavirus pandemic in Frankfurt, was eagerly awaited by markets. It will provide information about how aggressive a shift in interest rates is expected in the months ahead.

The challenge for policymakers is to control inflation while not causing an economic slowdown. This was due in part to the conflict in Ukraine, as well as the sanctions and embargoes between Russia and the European Union. Russia used previously to be a major source of energy imports.

Economics experts are divided on the question: expect hikes of 25 basis points or 50 basis pointsAt the September and July meetings, the ECB was widely expected to move out of negative rate territory before September’s end from the historic low of -10.5%.

The ECB also decreased its growth projections and revised its inflation projections. The annual inflation rate is expected to reach 6.8% by 2022. It will then decline to 3.5% and 2.1% respectively in 2023, 2023, 2024. This is an increase of its March projections which was 5.1%, 2.1% and 1.9% respectively in 2022.

The growth forecasts for 2022 were revised significantly down to 2.8% and 2.1% respectively, while 2023 was revised slightly up to 2.1%. 2024’s revisions to 2024 saw a slight increase to 2.1%. Comparable to the projections made at March’s ECB meeting, which were 3.7%-2022, 2.8%-2023 and 1.6%-2024.

Randall Kroszner (Professor of Economics at Chicago) told CNBC that it was important that the ECB start to adjust interest rates.

It U.S. Federal ReserveThe FOMC minutes indicated further aggressive increases ahead. In May, they began raising rates in March. They also implemented a 50 basis-point hike in May. This was the largest increase in its 22 year history. It is called the The Bank of EnglandThe base interest rate has risen to an all-time high of 13.3 percent at the four most recent meetings.

“Inflation can become very entrenched. It is extremely high.” [ECB policymakers]They move and they move fast and clearly that they intend to move further,” Kroszner stated on Thursday for CNBC’s Squawk Box Europe.

They risk inflation being entrenched, inflation expectations getting unanchored and raising rates far more than necessary.

Kroszner, however, expressed sympathy for the Governing council’s difficult situation, due to Europe’s closeness to war in Ukraine and Russia interdependence, which has resulted in a state of economic peril.

His concern was that “there are so many adverse shocks coming out of the war, sanctions and uncertainty that the economy is going down even though rates are not being raised, so inflationary pressures may come off.”

They have to move because there’s enough inflationary pressure, and the risk that inflation expectations will become unanchored.