ECB Lifts Rates; BofE Holds Line

The European Central Bank today raised the benchmark lending rate by a quarter point to 1.25 percent. Describing the ECB’s monetary policy as “accommodative”, ECB President Jean-Claude Trichet said that inflation risk remained on the upside and that an increase in the rate was necessary.

Trichet also hinted that additional interest rate hikes before the end of the year could not be ruled out.

“It is essential that recent price developments do not give rise to broad-based inflationary pressures over the medium term,” Trichet noted.

Also today, the Bank of England’s Monetary Policy Committee voted to keep the Bank Rate at 0.5 percent. The Bank Rate is the interest paid on commercial bank reserves held by the Bank of England.

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