As expected, the European Central Bank has again raised benchmark euro zone interest rates. They are now at 4% which is the highest level in nearly six years.
ECB President Jean-Claude Trichet stressed rates are still low enough to support economic growth and added that keeping inflation down remains the priority. He said: "We decided to raise the key ECB interest rates by 25 basis points. This decision was taken in view of the prevailing upside risks to price stability over the medium term that we have identified through both our economic and monetary analysis."
ECB policymakers have repeatedly issued strong warnings on inflation and the financial markets are betting rates will reach at least 4.25% this year.
The prospect for a surge in consumer spending is increased by confidence among businesses and households being at a six-year high and euro zone unemployment at record lows.
The ECB's worry is that companies will use the stronger economic growth to justify higher prices.
As the rate rise was announced the bank's economic staff issued new forecasts for this year saying the euro zone economy should expand about 2.6% with inflation averaging around 2%.
Source : euronews.net
ECB President Jean-Claude Trichet stressed rates are still low enough to support economic growth and added that keeping inflation down remains the priority. He said: "We decided to raise the key ECB interest rates by 25 basis points. This decision was taken in view of the prevailing upside risks to price stability over the medium term that we have identified through both our economic and monetary analysis."
ECB policymakers have repeatedly issued strong warnings on inflation and the financial markets are betting rates will reach at least 4.25% this year.
The prospect for a surge in consumer spending is increased by confidence among businesses and households being at a six-year high and euro zone unemployment at record lows.
The ECB's worry is that companies will use the stronger economic growth to justify higher prices.
As the rate rise was announced the bank's economic staff issued new forecasts for this year saying the euro zone economy should expand about 2.6% with inflation averaging around 2%.
Source : euronews.net
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