ECB sanctions eurozone rate rise
ECB sanctions eurozone rate rise
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Thursday, 02, Mar 2006 12:54
The European Central Bank (ECB) has raised interest rates on expectation of a further strengthening of the economy in the coming months.
The quarter-point increase to 2.5 per cent was widely anticipated by analysts, with all 54 experts surveyed by Dow Jones Newswires predicting the move.
Last week, ECB president Jean-Claude Trichet insisted the European economic outlook was positive, telling the EU's economic and monetary affairs committee that "the conditions remain in place for continued sustained economic expansion".
"Our assessment continues to reflect a progressive strengthening of economic activity, supported in particular, by stronger investment, which should be followed by a gradual strengthening of consumption growth," Mr Trichet said.
Mr Trichet has also expressed concerns in recent weeks that soaring energy prices could push up inflation, strengthening the case for a rate rise.
Before December's quarter-point increase, eurozone rates had remained on hold at two per cent for five years as a result of widespread economic stagnation.
Analysts will now await Mr Trichet's press conference this afternoon, where he will explain in further detail the rationale behind the central bank's decision.