ECB lifts interest rates to 1.25%

| April 7, 2011 | 0 Comments

The European Central Bank (ECB) has today elected to lift interest rates from 1% to 1.25% - for the first time in almost three years.

The move comes to tame rising inflation in the 17-member euro zone and was widely expected by analysts after the ECB had hinted that rate rises were on the cards.

Last month, inflation in the euro zone rose to 2.6% - above the ECB’s target of just below 2%.

The ECB has previously suggested inflation in the euro zone will peak in March but will remain above 2% this year.

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.

Meanwhile, the ECB also lifted its deposit rate by 25 basis points to 0.5%.

At a press conference, ECB President Jean-Claude Trichet said: “We did not decide today that it was the first in a series of interest rate increases.”

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.

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