Interest rates for the Eurozone were today raised to 4.25%, the first Eurozone interest rate rise in twelve months, in a move aimed at tackling record levels of inflation which this week hit 4%.
Rising food and fuel costs resulted in the European Central Bank raising its interest rate, a move which is thought could further weaken the dollar which is currently at a two month low, and lead to further increases in the trading price of oil.
In anticipation of the ECB’s rate increase, oil hit new record highs today, with Brent crude topping $146 a barrel for the first time.
The interest rate increase comes amid concerns that the eurozone economy is slowing and there are further concerns that rate hikes could slow the economy further.
“Today’s ECB interest rate hike underlines the bank’s determination to bring inflation down, even amid plain evidence of slowing gross domestic product growth” - Jennifer McKeown from Capital Economics.
Within the eurozone it was Spain who announced figures that suggested it is heading for recession with it service sector showing significant signs of retraction.
Other leading banks have also warned that It also signalled that more interest rate rises could be on their way if world oil and food prices continued to rise.
August 12th, 2008 at 1:52 am
According latest news “The European Central Bank and the Bank of England will remain on its current inerest rates as the two banking institutions decided to unchanged the interest rates despites slowing growth and inflation.”