Rates and eyebrows raised in Europe

Published Date: 06 July 2008 For the European Central Bank, dedicated to slaying the dragon of inflation, the moment of truth arrived on Thursday. The bank raised its benchmark interest rate a quarter of a percentage point to 4.25%, making good on a promise last month that it would act to curb food and fuel prices. But with Europe's economy slowing, the bank stopped well short of signalling the start of a new round of rate increases, as many bank watchers had expected. "Starting from here, I have no bias," the bank's president Jean-Claude Trichet declared a t a news conference. Trichet's measured words soothed markets, helped halt a slide in the dollar against the euro, and may have mollified European leaders worrying that higher exchange rates could choke their weakening economy. The bank's decision to tighten credit has... [read full story]