GERMANY: European Central Bank (ECB ) lifts interest rates to 3.75 percent, focus now on next move
- 00:00:35
- ITN Source
GERMANY: European Central Bank (ECB ) lifts interest rates to 3.75 percent, focus now on next move
The European Central Bank has raised its key interest rate to a new five-year high of 3.75 percent as expected and signalled no immediate end to rate increases in the euro zone. ECB President Jean-Claude Trichet told a news conference in Frankfurt on Thursday (March 8) that while rates now are moderate, monetary conditions still support economic growth in the region and the Governing Council stands ready to squelch inflationary pressures. "This decision was taken in view of the upside risks to price stability over the medium term that we have identified through both our economic and monetary analysis," Trichet said. European government debt slipped on these comments, with Euribor debt futures pricing in a greater chance that ECB rates would continue climbing this year. But the euro currency lost some ground, seeing rates nearing a peak. Trichet's description of interest rates as moderate marked a slight change in tune. Up until now, he has called euro-zone interest rates low, so the new language recognises that after 175 basis points of rate hikes since December 2005, credit conditions are less stimulative. Trader Fidel Peter Helmer of Hauck & Aufhaeuser private banking told Reuters Television that "the move came as no surprise." "To the contrary, we are counting on a further interest rate rise to four percent over the course of this year." JR/JRC
ITN Source | March 9, 2007
