ECB raises rates for first time since 2008

Eurozone official interest rates rose for the first time in three years on the 7 April 2011 as the European Central Bank reacted to accelerating inflation by tightening policy.

The increase in the ECB’s main interest rate, from 1% to 1.25%, followed a surge in eurozone inflation and increasing confidence at the Frankfurt-based institution that official borrowing costs no longer need to remain at emergency lows.

The move had been widely expected after Jean-Claude Trichet, ECB president, signalled in March 2011 that a rise was likely in the following month. But it was likely to prove controversial, especially coming just hours after Portugal announced it was seeking European Union help with its escalating financial crisis.

EurActiv, 8.4.11: ECB hikes rates, ready to move again in July http://www.euractiv.com/en/euro-finance/ecb-hikes-rates-ready-move-july-news-503928

ESO: Background information: ECB criticised over expected rate rise http://www.europeansources.info/record/ecb-criticised-over-expected-rate-rise/

ECB: Press Release, 7.4.11: Introductory statement to the press conference, 7 April 2011 http://www.ecb.int/press/pressconf/2011/html/is110407.en.html

ECB: Press Release, 7.4.11: Monetary policy decisions, April 2011 http://www.ecb.int/press/pr/date/2011/html/pr110407.en.html

BBC News, 7.4.11: Eurozone interest rates raised to 1.25% by ECB http://www.bbc.co.uk/news/business-12997333

Deutsche Welle, 7.4.11: ECB raises rates for the first time in nearly three years http://www.dw-world.de/dw/article/0,,14973989,00.html

Spiegel Online International, 7.4.11: To Fight Inflation, Europe Ends Cheap Money Strategy http://www.spiegel.de/international/europe/0,1518,755710,00.html

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