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ECB ups rates by quarter point to 4.25%

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Date: Thursday 03 Jul 2008

LONDON (ShareCast) - The European Central Bank upped its main lending rate by a quarter point to 4.25% on Thursday, the first rise in more than a year.

The hike was in line with expectations after ECB president Jean-Claude Trichet said last month that the bank could raise rates "by a small amount" in July.

Euro zone inflation at a record 4% year-on-year in June put pressure on the ECB to increase rates. The inflation rate compares to 3.7% in May and was the highest in over 16 years, according to European Union statistics office Eurostat.

Trichet said in a press conference this afternoon that today’s rise will help bring inflation back below 2%, which can be interpreted as a signal that there will be no more increases in the near future.

“Today's decision will contribute to achieving our objective,” he said.


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