ECB Raises Rates a Quarter Point

The European Central Bank did what the Fed decided against - a 25 basis point rate hike. The details:

1. The minimum bid rate on the main refinancing operations of the Eurosystem will be increased by 25 basis points to 4.25%, starting from the operation to be settled on 9 July 2008.



2. The interest rate on the marginal lending facility will be increased by 25 basis points to 5.25%, with effect from 9 July 2008.



3. The interest rate on the deposit facility will be increased by 25 basis points to 3.25%, with effect from 9 July 2008.

So what can we expect further rate hikes in the future? Not necessarily, if you listen to European Central Bank President Jean-Claude Trichet:

In a statement delivered at his monthly news conference, Trichet used none of the phrases employed in the past to signal a further rate hike was imminent.

Asked about the lack of language highlighting either "heightened alertness" or "strong vigilance" on inflation pressures, Trichet said the ECB's message was clear and that the governing council would strive to communicate with the markets in "a clear fashion that will allow us to be as predictable in the future as we have been in the past."