|
European Central Bank increased the basic interest rate to 4.25% |
|
Thursday, 03 July 2008 |
European Central Bank (ECB) decided today, 3 July to raise the basic rate by quarter punk reach 4 percent to 4.25 percent.
European interest was not changed over a year. Last time it was increased in June 2007, while inflation in the euro bank stopped by step on the downside.
Today's decision of the bank is not surprising, after last month ECB president Jean-Claude Trichet said that interest is possible to rise in July.
It said the bank clearly its position on combating inflation in the 15 countries of the Euro Union.
It is not clear however whether this will only increase. Analysts do not provide the opportunity for further growth, however the international markets continue allegations that the central financial institution will raise the basic rate of 4.5% by the end of the year.
Just before the ECB announced its decision to the data from the statistical studies show that the decline of the European economy continues.
European Commissioner for economic and monetary relations Joachim Almunia said that the low rate of economic growth, along with high inflation pose a threat to the European economy. These negative trends will be crucial to the future course of policy of the ECB.
In June, for the first time a three-year decline was recorded in the manufacturing sector and in services. Confidence of investors and consumers reduced, a situation of financial markets continues to be tense.
The leadership of the bank is confused by the increase in inflation to 4% and the increase in the price of oil at 145 dollars for a barrel (oil now exceed 146 dollars for a barrel, b.r.)
cor
According to the president of the ECB must take "serious measures, otherwise inflation will acquire enormous proportions". According to other representatives of the bank, there are also increases in wages.
Themselves representatives of the ECB stressed that they did not intend to raise interest rates several times. Experts, however, recall, however, that in 2005 The ECB has indicated that it will not increase the basic rate, but then they rose 8 times in less than 2 years.
European Central Bank are aware that there is a risk of increasing interest to continue the trend to increase the rate of the euro against the dollar this. Since the U.S. Federal Reserve is not planning to increase its interest rates, those in the European Union may cause investors to prefer the European market to the U.S..
In its annual report, however, the Bank for International Settlement (BIS) urges the central banks of countries around the world to sacrificing growth in the name of fighting inflation. Today's decision of the ECB is precisely in this direction. |
Banking 
