The European Central Bank on Thursday delivered a widely expected increase in interest rates, citing inflation that continues to run too hot while saying future moves will depend on incoming economic data.

The ECB raised its deposit rate by 25 basis points, or a quarter of a percentage point, to 3.75%. The bank's refi rate and the rate on its marginal lending facility were also lifted by a quarter-point each.

"Inflation continues to decline but is still expected to remain too high for too long," the ECB said in a statement. "The Governing Council is determined to ensure that inflation returns to its 2% medium-term target in a timely manner."

The move comes as the eurozone economy continues to slow, but inflation remains stubbornly above the ECB's target. While Thursday's move was widely anticipated, investors have grown less sure about the prospect for another hike when policy makers next meet in September.

Much like the Federal Reserve, which delivered a quarter-point rate rise on Wednesday, the ECB emphasized that future moves would depend on incoming data.

"The Governing Council's future decisions will ensure that the key ECB interest rates will be set at sufficiently restrictive levels for as long as necessary to achieve a timely return of inflation to the 2% medium-term target," the ECB said. "The Governing Council will continue to follow a data-dependent approach to determining the appropriate level and duration of restriction."

Source : Marketwatch