ECB raise interest rates by 0.25% to 3.75%
08.03.07
Following last month’s decision to leave rates on hold, the ECB raised interest rates today by 0.25% to 3.75%. The move will come as little surprise to the market in the wake of Trichet’s comments last month, where there was a return for his code words ‘strong vigilance’ [against inflation]. European HICP is currently running at 1.8%y/y just below the ECB’s 2.00% target rate however it is understood that the committee are likely to maintain their tightening bias in their desire to return rates to ‘normal levels’. Attention now turns to this afternoon’s press statement where the market will be looking for any indication of further tightening in the months ahead.