ECB Raises Interest Rate - 7.7.2011

As it was widely expected, the European Central Bank raised borrowing costs today by a quarter percentage point to 1.5%. Inflation in the euro zone accelerated to 2.7% in June, higher than the central’s bank target 2%, but still lower than April’s 2.8%. Further comments on inflation and growth outlook may appear during the following press conference of the ECB President Trichet. The euro however remained under pressure just after interest rate decision announcement and fell against the dollar to 1.4250. Earlier today the Bank of England kept interest rates at record low 0.5%, providing further stimulus for a relatively weak economic growth. In the first quarter the economy expanded by 0.5%. Meanwhile, inflation rate in the UK accelerated to 4.5%, exceeding more than twice the central bank’s target. The pound extended losses against the US dollar, falling toward 1.5950.