The European Central Bank (ECB) slowed the pace of its interest rate increases Thursday, stepping back like the U.S. Federal Reserve (Fed) from a string of jumbo hikes aimed at snuffing out inflation. The ECB’s quarter-point hike follows evidence that its efforts are working by making mortgages and business loans more difficult to take out.

The decision came a day after the Fed approved a quarter-point increase and hinted that it may have reached the end of its hiking cycle. But the central bank for the 20 countries that use the euro currency started later and said it still has further to go even as economic growth slows to a crawl and U.S. bank instability stirs new fears of financial turmoil.

"Based on the information we have today, we have more ground to cover, and we are not pausing," ECB President Christine Lagarde said at a news conference.

The bank said inflation "has declined over recent months, but underlying price pressures remain strong." It tells its streak of six hikes of half – or three-quarters of a point is being "transmitted forcefully" by making loans more challenging to get, but how that affects the rest of the economy isn’t yet clear.

This week, the ECB’s lending survey showed that banks are getting stricter about giving loans and that consumers and companies are asking for less credit and fewer mortgages.

Making borrowing more expensive can cool off spending, easing pressure on prices but potentially weighing on economic growth. As a result, demand for housing loans in the eurozone plummeted in the first three months of the year, following the sharpest decline since statistics started in 2003 at the end of last year.

Inflation is high at 7% and has been fueled by Russia’s invasion of Ukraine, which drove up oil prices and led Moscow to cut off most natural gas to Europe. As a result, energy costs have fallen, but the surge still feeds through to higher prices for goods, services and food.

The spiking cost for Europeans to feed their families has become the new pain point. Food prices jumped 13.6% in April from a year earlier, following a 15.5% annual increase the month before.

So-called core inflation, which excludes volatile fuel and food prices, fell only slightly in April, to 5.6% from a record 5.7% the month before. However, it’s considered a clearer picture of whether the economy’s price pressures are building up from demand for goods and higher wages.

Workers across Europe have been striking for wages that keep pace with inflation. Analysts say average pay rises could hit 5% this year – driven by eye-catching deals like German public employees’ 11% salary increase over two years.

The ECB slowed down even though renewed turmoil in the U.S. banking system appears – so far– not to be shaking the stability of Europe’s banks, the chief source of credit for businesses.

U.S. officials seized First Republic Bank this week and sold it to JPMorgan Chase, the third major bank failure following the collapse of Silicon Valley Bank and Signature Bank in March.

The earlier turmoil enveloped long-troubled Swiss lender Credit Suisse. It led to a government-orchestrated takeover by rival UBS, but European financial officials say their banks have minimal direct exposure to the U.S. troubles.

Despite concerns about their impact on economic growth, the central bank has pressed ahead with rate hikes. Compared with the previous quarter, the eurozone barely scraped out 0.1% growth in the first three months of the year.

The ECB’s decision brings its benchmark rate on bank deposits to 3.25%.