Interest rates hit five-year high[fr] 

ECB President Jean-Claude Trichet said that while rates are now moderate, conditions for further economic growth were favourable and that the Bank would act against inflationary pressures.

"Our monetary policy continues to be on the accommodative side, with the key ECB interest rates moderate, money and credit growth vigorous, and liquidity in the eurozone ample by all plausible measures," Trichet said.

The ECB president added that the Bank would be flexible in its approach: "If I was preparing the market for us being restrictive, I would have said that. I did not say that." At the same time, he left the door open to further rate increases: "I did not say we were at a peak, full stop."

Market analysts have read this as a sign that ECB rates could be heading to 4% and possibly higher with strong growth and inflation expected next year. 

Eurochambres, the association of European chambers of commerce and industry, regretted the interest hike, expressing concern over its possible negative impact on growth and job creation within the EU. Eurochambres President Pierre Simon said: "The expected ECB decision to once more raise interest rates, which have now reached the highest level since September 2001, is not likely to help European enterprises…we urge the ECB once more to give equal attention to growth and employment.  The current economic upswing should be sustained." 

The ECB estimates eurozone growth of 2.5% for this year and 2.4% for 2008 after strong growth in the final quarter of 2006 and lower oil prices, figures revised up from 2.2% and 2.3% repectively. Projected inflation in the area was revised up to 2% from 1.9%.