European Central Bank’s interest rate raised to 4.25 percent

On Thursday the European Central Bank raised its benchmark interest rate to 4.25 percent in an attempt to fight inflation, this was a one-quarter of a percentage point increase.

The interest rate decision was made yesterday after the ECB promised in June that it would try and curb fuel and food prices, this was short of what many bank watchers expected.

In the United States the Federal Reserve has an interest rate that is around half of those in Europe, while inflation is a growing concern in the U.S. they have not yet acted to battle this.

The inflation worries are not just tied to the United States and Europe, other central banks have also lifted rates this week, and this includes banks from Scandinavia to Southeast Asia.

The worry for some analysts is that this interest rate increase with the European Central Bank is a one-time gesture and not the beginning of a trend, so the future of inflation and the European economy is wide-open for change that may not be so positive.

We need to fight inflation and respond to the spiraling oil and food prices, lets hope we take a note from history when making these choices, especially when looking at the failure to respond more quickly in the first oil shock of 1973.

Source: Read