ECB raise interest rates to 4.00%
06 June 2007
06.06.07
ECB raise interest rates by 0.25% to 4.00%
The ECB conformed to market expectations and raised rates by 0.25% to 4.00% at today’s meeting. The hike will come as no surprise to the market following Trichet’s code words ‘strong vigilance’ [against inflation] in his recent statements. Meanwhile, the European economy remains robust (Q1 GDP rose +0.6%m/m, +3.0%y/y) coupled with inflation (1.9%y/y) that is running close to the ECB’s 2.0% target rate and consequently, there is still scope for further tightening in the months ahead. As a result, the market will pay close attention to the accompanying statement this afternoon for any indication that further rate hikes are still on the cards.