UPDATE 5-ECB raises rates, Trichet open on future moves
July 3rd, 2008 | by admin |* ECB raises rates by 25 bps to 4.25 pct, as expected * Trichet says no policy bias, new interest rates contribute toprice stability * Euro weakens versus dollar, short-dated Bund prices surgeafter Trichet perceived as dovish
By Marc Jones
FRANKFURT, July 3 (Reuters) - The European Central Bankraised interest rates to their highest level in nearly sevenyears on Thursday, but dimmed the prospect of further moves, aseuro zone growth looks set to falter despite soaring inflation.
After the ECB raised rates to 4.25 percent from 4 percent ina widely expected move, Trichet said this was needed to help getrecord euro zone inflation back under control.
“The monetary policy after today’s decision will contributeto achieving our objective of price stability,” he told a newsconference, describing the decision has unanimous unlike lastmonth’s three-way split.
But Trichet evinced no desire on the part of the GoverningCouncil to change monetary policy again soon.
“Starting from here I have no bias. You know of course ourconstant position which is part of our monetary policy — wehave no pre-commitment on the medium term.”
The euro weakened against the U.S. dollar <EUR=> afterTrichet’s comments did little to feed markets’ earlierexpectations of another rate rise this year, but trade unionsstrongly criticised even the one rate rise.
