The European Central Bank today defied political pressure and raised the cost of borrowing across the 15-nation eurozone. Despite growing evidence of economic slowdown in several European countries, the ECB showed its determination to fight inflation by raising interest rates to 4.25% from 4%. This is the first Eurozone rate rise since last June, and comes after European inflation hit a record high of 4% last month - twice as high as the ECB's target. Analysts said that it showed that the central bank is determined to try and keep a lid on inflation expectations. The decision brought little relief to stock markets across Europe, which are in retreat after yesterday's losses on Wall Street. The ECB had been widely expected to increase the cost of borrowing since its president, Jean-Claude Trichet, warned a month ago that it...
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