ECB raises rates to 4.25 percent

By Krista Hughes FRANKFURT (Reuters) - The European Central Bank raised interest rates for the first time in more than a year on Thursday, in a widely expected quarter percentage-point move which took benchmark rates to 4.25 percent, the highest level since September 2001. The ECB acted after euro zone inflation accelerated to 4.0 percent year-on-year last month, more than double the bank's medium-term goal. ECB President Jean-Claude Trichet will explain the decision at a news conference at 1:30 p.m. "This move is largely a symbolic gesture aimed at getting inflation expectations down," said Dario Perkins, European economist at ABN Amro. "I get the feeling that markets are starting to question the inflation credibility of the (U.S.) Federal Reserve and the Bank of England. The signal the ECB are sending today is that they are... [read full story]