ECB hikes interest rates to 4.25 per cent

  • Story by: Gemma Westacott and Sharon Flaherty
  • Magazine: FTAdviser
  • Published Thursday , July 03, 2008

The European Central Bank (ECB) has raised interest rates by 25 basis points today (3 July) to 4.35 per cent - the first rate rise since June 2007.

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Market speculation had widely tipped a rate increase, as the ECB looks to stop inflation from continuing to spiral upwards.

The Euro economies have been plagued by rising fuel and food prices over the past few weeks and inflation in the Equozone has risen to a high of 4 per cent.

Increasing commodity prices are being blamed for the push on inflation and it is hoped that a hike in interest rates will stop inflation from spiralling upwards. It is already double the ECB's target of just less than 2 per cent.

In the UK, the Bank of England has acted differently to the inflation and credit crunch problems by actually decreasing interest rates several times since the problems began last summer. The UK base rate is currently 5 per cent with inflation at 3.3 per cent.



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