ECB expected to raise key interest rates today

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

The European Central Bank (ECB) is expected to raise interest rates by a quarter point later today (3 July).

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The announcement is expected at midday and rates are predicted to rise to 4.25 per cent from their current level of 4 per cent.

Rising fuel and food prices have been plaguing the Euro economies over the past few weeks and inflation 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.

If the interest rate increases, it will be the first rise since June 2007.

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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