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Eurozone rates on hold at 3.75% Eurozone rates on hold at 3.75%
(30 minutes later)
The European Central Bank (ECB) has maintained its benchmark interest rate on hold at 3.75%, as expected.The European Central Bank (ECB) has maintained its benchmark interest rate on hold at 3.75%, as expected.
But many analysts think the European Central Bank will raise rates as early as June, to keep inflation in check.But many analysts think the European Central Bank will raise rates as early as June, to keep inflation in check.
The widely-expected move comes after the Bank of England announced that it would increase rates to 5.5%, the highest level in six years.The widely-expected move comes after the Bank of England announced that it would increase rates to 5.5%, the highest level in six years.
A day earlier, the US opted to keep its interest rate at 5.25%, amid fears over the cooling housing market.A day earlier, the US opted to keep its interest rate at 5.25%, amid fears over the cooling housing market.
The last time the ECB raised rates was in March, when it was increased by a quarter of a percentage point from 3.5%.The last time the ECB raised rates was in March, when it was increased by a quarter of a percentage point from 3.5%.
The ECB has stressed the risk of increasing inflation in the 13-member eurozone. 'Strong vigilance'
The ECB has stressed the risk of rising inflation in the 13-member eurozone.
After the ECB announced its decision to hold rates this month, the bank's president Jean-Claude Trichet told a press conference that "strong vigilance" was necessary in monitoring price risks.
The phrase is seen as a signal to the markets that the benchmark rate will be lifted to 4% at the ECB's next meeting in June.
"Monetary development continues to require very careful monitoring particularly against the background of solid expansion in the economic activity and still strong property market developments," Mr Trichet said.
Some market experts take the view if the eurozone economy gains further momentum as the year progresses, the ECB could tighten monetary policy further to 4.5% by mid-2008.
The euro was trading at $1.352 against the dollar in afternoon European trading, below the record $1.368 it reached on 27 April.