April 7, 2011
The European Central Bank on Thursday raised its benchmark interest rate to 1.25% from a historic low of 1%, making it the first of the developed world's major central banks to begin raising rates as the economy recovers from recession.
The move, which marks the ECB's first rate rise since July 2008, comes despite the deepening debt crisis in the euro zone's periphery, after Portugal became the third nation in the 17-country bloc to ask for an international bailout.
European Central Bank President Jean-Claude Trichet answered reporter's questions during his monthly news conference at the ECB headquarters in Frankfurt, Thursday.
ECB President Jean-Claude Trichet indicated Thursday that the ECB will proceed cautiously after deciding to raise credit costs, citing worries that financial-market tensions could spill over into the economy.
The widely anticipated step means the U.S. Federal Reserve, the Bank of Japan and the Bank of England now lag the ECB in reversing low-interest policies.
"We didn't decide today that it was the first of a series of interest-rate increases," Mr. Trichet said. "We will continue to do in the future as we have done in the past, to take the appropriate decisions for price stability."
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