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12th of July 2011
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ECB lifts interest rates to 1.5%

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by Kay Mitchell

The European Central Bank (ECB) has today elected to lift interest rates from 1.25% to 1.5% - the second increase since April.

The move comes to tame rising inflation in the 17-member euro zone and was widely expected by analysts and more rate rises are on the cards.

Inflation in the euro zone currently stands at 2.7% - higher than the ECB’s target of just below 2% - and is expected to remain above target for the short-term at least.

Many major economies are battling with higher inflation, which is rising due to higher energy, commodity and food prices.

Many central banks across the world have lifted interest rates in a bid to tame inflation and the problem is particularly rife in Asia.

At a press conference, ECB President Jean-Claude Trichet said: “We will continue to monitor very closely all developments with respect to upside risks to price stability.”

The news comes shortly after the Bank of England opted to keep interest rates at the historic low of 0.5% despite inflation being more than double its 2% target.

The Bank of England has been reluctant to lift rates as the recovery appears to be losing momentum.

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News posted: July 7, 2011

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