European Central Bank Slows Pace of Rate Increases

FRANKFURT—The European Central Bank slowed the pace of its interest-rate increases but signaled it isn’t ready to pause its campaign against high inflation, diverging from the Federal Reserve.

In a statement, the ECB said it would increase its key rate by a quarter percentage point, to 3.25%, a near 15-year high. It was the smallest move since the bank started raising rates last July. The bank also said it would reduce its bondholdings at a faster pace starting in July, a move that is likely to weigh further on economic growth and inflation.