ECB: I'll Just Have A Half
The European Central Bank cut interest rates in the euro zone by a half point to 1.5% this afternoon, in a widely expected move.
Unlike the UK, the ECB had left its key interest rate unchanged at 2% last month after reducing the rate four times since October 2008.
The move follows a similar one from the BoE earlier in the day, who cut rates in the UK to just 0.50 percent.
Both cuts were already factored into the market leaving the pound steady against the euro at 1.1225.
ECB Cuts Rates As Expected
The ECB has cut interest rates in the Euro Zone by the half percent widely anticipated by the market. Rates in Europe now stand at 2%, one half percent higher than here in the UK.
This is the ECB's the fourth cut a little over three months.
The forex markets were little moved by the announcement, which was largely already priced in. The pound was worth 1.11 against the euro at 2pm GMT.
ECB Cuts Rates By Three Quarters
The European Central Bank cut it's interest rate by three quarters of a percent to 2.5% today.
Analysts had been anticipating a cut of between a half and three quarters.
EU base rates are now half a point higher than rates here in the UK.
The euro dipped slightly following the news to 86.41 pence against the pound, from an earlier all-time high of 86.93 pence.
ECB Cuts Rates A Half
European Central Bank this afternoon cut benchmark interest rates by half a percentage point to 3.25 percent.
The move was widely expected. The ECB, as usual did not give any further explanation, so all the eyes were set on a press conference subsequently held by Mr. Trichet.
In it he said, "We were unanimous in thinking that the significant decrease of rates was appropriate in the present circumstances."
"We discussed several options. Options of diminishing rates by 50 basis points, options of diminishing rates by 75 basis points. All taken into account, after having checked and discussed the pros and cons of those different options, we decided unanimously it was appropriate to decrease by 50 basis points."
"I don't exclude that we could decrease rates again. Again, we are not precommitted in any respect, we'll do whatever is necessary to take into account the situation as it will unfold progressively," he added.
ECB raises interest rates to 4.25%
(Guardian) -- The European Central Bank today raised interest rates in the 15-nation eurozone by 0.25% to stem soaring inflation despite mounting political opposition and increasing signs of a contracting European economy.
Its move, decided unanimously by its governing council, could trigger a round of rates increases from other western central banks in the eyes of some observers but Jean-Claude Trichet, ECB president, made plain it did not signal a series of rates increases - for now at least.
The ECB, put on a state of "heightened alert" last month over surging inflation and determined to reassert its counter-inflation credibility, increased borrowing costs from 4% to 4.25% - the first jump since June last year.
Inflation in the eurozone hit a record high of 4% - or more than twice the ECB's target - last month, partly as a result of oil prices which rose to $146 a barrel today, and Trichet repeatedly warned that further rises in food and energy prices could follow.
He insisted that inflation was now the number one issue among the eurozone's 320 million citizens and the ECB would live up to its mandate to deliver price stability - inflation close to but below 2% - in the medium term. "We tell them very solemnly they can count on us," he told a news conference in Frankfurt.
Financial markets had been expecting the ECB to increase rates at least two more times or close to 5% to avert a so-called wage-price spiral in the face of surging energy and food prices. But most economists believe today's decision will be a one-off and the bank will move to start cutting rates next year as the eurozone economy slumps.
Trichet asserted repeatedly that the rates increase would "contribute to our objective of price stability over the medium term", prompting Philip Shaw, chief economist at Investec to comment: "There's nothing to suggest the ECB has an itchy trigger-finger."
But the bank's president coupled his remarks with a warning to companies and pay negotiators that excessive price and wage increases to claw back soaring commodity and energy costs would indeed trigger further rises in borrowing costs. "I have no bias," he said, reasserting a wait-and-see attitude.
