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ECB raises key rate to 4.25 percent
FRANKFURT, Germany -- Wary of higher energy and commodity prices, the European Central Bank raised its benchmark interest rate Thursday by a quarter percentage point to 4.25 percent, a move it hopes will help curtail rising inflation in the 15 countries that use the euro. The move comes despite worries in some quarters that it could dampen growth, but ECB President Jean-Claude Trichet said at a press conference that the fundamentals of Europe's economy "are sound" and that the bank was focused on inflation -- which he said could remain high "for a more protracted period than previously thought." He did not signal when rates might go up again, as he did at last month's meeting. The increase was the first since June 2007. Thursday's move was widely expected, and Trichet said the decision was unanimous among members of the bank's governing council. G-8 to meet in dark economic times SAPPORO, Japan -- Between surging oil prices, food inflation and a credit crunch that's depressed global growth, leaders from the Group of Eight economic powers face the gravest combination of economic woes in at least a decade when they gather next week. The outlook has darkened dramatically since last year's summit in Germany, when the leaders declared the global economy was in "good condition" and oil cost $70 a barrel -- which seemed high at the time. Since then, the U.S. subprime mortgage crisis has erupted, roiling markets and battering major financial firms. Oil has doubled to above $140 and food prices have jumped, hurting the poor in particular and raising the threat of political instability. |
