ECB Raises Rates By 0.25%

FRANKFURT (Reuters) - The European Central Bank raised interest rates by 25 basis points to 1.25 percent on Thursday, announcing its first hike since July 2008 to counter firming inflation pressures in the 17-country euro zone.

The euro was steady after the decision, which ECB policymakers had flagged heavily in advance. All but four of 80 economists polled by Reuters last week expected a 25 basis point rise.

The increase in the ECB's benchmark refinancing rate marks a gentle exit from the central bank's policy response to the global financial crisis. It had held the refi rate at a record low 1.0 percent since May 2009.

The ECB also raised its deposit rate by 25 basis points to 0.50 percent, and increased its marginal lending rate by the same amount to 2.0 percent.

Reuters



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