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Sunday 06th of March 2011
March 3, 2011    

ECB holds rates despite higher inflation

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by Kay Murchie

The European Central Bank (ECB) today elected to keep interest rates on hold at the record low of 1% for the 21st consecutive month.

The move came despite inflation exceeding the Bank’s target.

Inflation in the 17-member euro zone rose to 2.4% in January - above the ECB’s target of just below 2%.

The bank expects inflation to stay above the 2% mark for the remainder of the year, before falling back in 2012.

However, Jean-Claude Trichet, the ECB’s president has said that a rise in interest rates is “possible” at the next policy meeting, in view of recent “price shocks”.

Inflationary pressures are rife throughout the world as food and energy prices rise.

In the last few weeks, central banks in China, Indonesia and India have all increased interest rates as pressures increase in Asia.

Just yesterday, Brazil‘s central bank lifted interest rates for the second time in three months.

The UK is expected to hike rates shortly as inflation is currently double the 2% target.

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