ECB raises interest rates

The European Central Bank raised interests rates by a higher-than-expected 0.50% to 4.25%.

The European Central Bank raised the interests rates by 0.50% to 4.25%. Fear for higher inflation made the Bank raise its rates with a higher-than-expected margin. The Euro picked up against the dollar after the announcement.

According to ECB chief Duisenberg, the move was necessary because of rising inflation forecasts in recent months. "Today's increase in ECB interest rates is a decisive step to address these upside risks to price stability and it will contribute to the continuation of non-inflationary growth in the euro area", said the ECB President.

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