The euro dropped against other major currencies in trading on Thursday after the European Central Bank (ECB) raised its key interest rates by 50 basis points.
The move was in line with economists' expectations.
The move comes amid volatility in financial markets following the collapse of US tech-sector lender Silicon Valley Bank and a crisis at Swiss banking giant Credit Suisse. The ECB indicated that high levels of uncertainty affirmed the importance of its data-dependent approach to future interest rate decisions.
The ECB's Governing Council, led by ECB President Christine Lagarde, raised the main refinancing rate to 3.50%, the deposit facility rate to 3% and the marginal lending rate to 3.75%.
Future ECB interest rate decisions "will be determined by its assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation, and the strength of monetary policy transmission," the ECB said on Thursday.
The ECB said the Governing Council is monitoring current market tensions closely and stands ready to respond as necessary to preserve price stability and financial stability in the euro area.
The ECB also raised the growth and core inflation projections for the euro area for this year. The ECB staff now sees average growth of 1% and core inflation at 4.6% this year.
The euro was down against the US dollar, trading at €1.0550, down from Wednesday's closing price of €1.0576. The euro also fell against the British pound, the Japanese yen, the Swiss franc and other major currencies.
