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| Version 2 | Version 3 |
|---|---|
| ECB raises eurozone rates to 4% | ECB raises eurozone rates to 4% |
| (20 minutes later) | |
| The European Central Bank (ECB) has raised interest rates for the eurozone to 4% from 3.75%. | The European Central Bank (ECB) has raised interest rates for the eurozone to 4% from 3.75%. |
| The increase takes rates in the area to their highest level for six years and means they have doubled in 18 months. | The increase takes rates in the area to their highest level for six years and means they have doubled in 18 months. |
| The rise had been expected following a series of inflationary warnings from ECB members in recent weeks. | The rise had been expected following a series of inflationary warnings from ECB members in recent weeks. |
| At his news conference, ECB president Jean-Claude Trichet used a form of words to suggest there may be more rate rises this year, but not next month. | |
| Confidence high | Confidence high |
| The eurozone economies, especially Germany, have been growing strongly in 2007. | The eurozone economies, especially Germany, have been growing strongly in 2007. |
| Unemployment in the eurozone is at its lowest level since the launch of the euro while confidence is high and business activity is expanding. | Unemployment in the eurozone is at its lowest level since the launch of the euro while confidence is high and business activity is expanding. |
| There are more rate hikes in the pipeline Audrey Childe-Freeman, CIBC World Markets | There are more rate hikes in the pipeline Audrey Childe-Freeman, CIBC World Markets |
| The ECB has revised upwards its forecast for inflation in the eurozone this year to 2% from 1.8% but it has not changed its forecast of 2% for next year. | The ECB has revised upwards its forecast for inflation in the eurozone this year to 2% from 1.8% but it has not changed its forecast of 2% for next year. |
| Mr Trichet said that eurozone monetary policy is "still on the accommodative side", which analysts interpreted to mean that he was prepared to allow this growth to continue. | Mr Trichet said that eurozone monetary policy is "still on the accommodative side", which analysts interpreted to mean that he was prepared to allow this growth to continue. |
| 'Monitor closely' | 'Monitor closely' |
| If Mr Trichet had dropped the word "accommodative" from the statement, it would have suggested that rates were approaching their peak. | If Mr Trichet had dropped the word "accommodative" from the statement, it would have suggested that rates were approaching their peak. |
| And the ECB president did not use the term "strong vigilance", which he used in May as a signal that rates would rise this month. | And the ECB president did not use the term "strong vigilance", which he used in May as a signal that rates would rise this month. |
| He said that the ECB's governing council would "monitor closely all developments". | He said that the ECB's governing council would "monitor closely all developments". |
| In the past, saying that he was watching inflation "very closely" meant that a rise was a few months away. | In the past, saying that he was watching inflation "very closely" meant that a rise was a few months away. |
| "Trichet is in close monitoring mode, liquidity is ample and more importantly he says monetary conditions remain accommodative - that confirms that there are more rate hikes in the pipeline," said Audrey Childe-Freeman, an economist at CIBC World Markets. | "Trichet is in close monitoring mode, liquidity is ample and more importantly he says monetary conditions remain accommodative - that confirms that there are more rate hikes in the pipeline," said Audrey Childe-Freeman, an economist at CIBC World Markets. |
| Marc Stocker from BusinessEurope, which represents 20 million European companies, said: "We don't have any strong reservations with today's decision, which was justified by prevailing economic conditions." | Marc Stocker from BusinessEurope, which represents 20 million European companies, said: "We don't have any strong reservations with today's decision, which was justified by prevailing economic conditions." |
| The ECB's benchmark rate - the rate that has been raised from 3.75% to 4% - is the minimum bid rate for its regular refinancing operations. | The ECB's benchmark rate - the rate that has been raised from 3.75% to 4% - is the minimum bid rate for its regular refinancing operations. |
| Its two other key rates have gone up by the same amount. The deposit rate is now 3% and the marginal lending rate is 5%. | Its two other key rates have gone up by the same amount. The deposit rate is now 3% and the marginal lending rate is 5%. |