Forex - ECB raises interest rate to 4.25%. | CountingPips Forex & Currency Trading Blog

July 3, 2008 - Forex Economic News

ECB raises interest rate to 4.25%.

The European Central Bank increased its key interest rate 25 basis points today to 4.25 percent. The ECB raised its interest rate as widely expected to try to curb the effects of inflation and keeping in tune with their monetary policy mandate of price stability. ECB President Jean-Claude Trichet explained the interest rate move in the bank's statement, "This decision was taken to prevent broadly based second-round effects and to counteract the increasing upside risks to price stability over the medium term. HICP inflation rates have continued to rise significantly since the autumn of last year. They are expected to remain well above the level consistent with price stability for a more protracted period than previously thought."

The euro fell against the U.S. dollar today in currency trading as Trichet signaled in his news conference that the ECB may be done raising interest rates for the time being. The EUR/USD fell from 1.5878 to below 1.5700 today in forex trading. The euro also showed weakness against the other major currencies in trading today.

Tags: eur, ecb, currency trading, european central bank

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