ECB raises eurozone lending rate to 4.25% amid record inflation

AFP, July, 2008

FRANKFURT (AFP) — The European Central bank raised eurozone lending rates Thursday to fight record inflation but ECB chief Jean-Claude Trichet signalled the bank had not embarked on a series of hikes.

With the bank's main lending rate now at a seven-year high of 4.25 percent, Trichet told a press conference its monetary policy "will contribute to achieving our objective" of price stability, a code phrase that suggested more increases were not immediately at hand.

"The bank seems now in a wait-and-see mood," commented BNP Paribas economist Clemente De Lucia, before adding: "Should risks to price stability increase further, the bank will be ready to act."

Outside the eurozone, central banks in Denmark and Sweden both raised their benchmark rates by a quarter of a point to 4.60 percent and 4.50 percent respectively Thursday to curb price increases felt by consumers around the world. ...