Not since October 2000, when the euro was newly launched, have rates been this high.

On Thursday, the European Central Bank (ECB) increased its benchmark rate to 3.75%, up 0.25 percentage points, making borrowing more expensive as inflation stood at 5.5% in the year up to June.

It was the ninth consecutive rise as the ECB president, Christine Lagarde, said inflation will remain above target for an extended period but will eventually come down.

Commentators had thought a rise in July would mean a holding of rates in September. Ms Lagarde said the rate setters had an "open mind" on the September decision and would follow the economic data, such as economic growth and inflation figures.

"We might hike and we might hold," she said.

A mixed economic outlook was forecast for the Eurozone as the near term forecast deteriorated due to weaker domestic demand, high inflation and financing dampening conditions.

While unemployment was at a historic low, Ms Lagarde said this trend may slow.

Similar to the UK, profit margins were identified as being a driver of inflation by Ms Lagarde as energy prices fell. External price pressures were no longer the main driver of inflation and had been over taken by domestic factors such as higher wages.

Governments were also told by Ms Lagarde they should "promptly" roll back energy support measures due to falling prices.

Across the world interest rates have been increased to take money out of the economy and bring down price rises.

Most recently the US central bank, known as the Fed, recommenced its programme of rises after a pause.

Interest rates have risen to 5% in the UK too, and are expected to go even higher, as inflation proved to be stubborn.

Inflation became a global problem after the Russian invasion of Ukraine resulted in soaring gas and oil prices.