ECB hikes borrowing rate to 3.50%

The European Central Bank raised its key interest rates, hiking the minimum bid rate on its main refinancing operations to 3.50% from 3.25%, while the Bank of England, Bank of New Zealand and the Reserve Bank of Australia all maintained rates steady.
The decision was taken at the meeting of the ECB governing council and was fully expected by financial markets. ECB president Jean-Claude Trichet had signalled that the central bank was planning such a move.
The new minimum bid rate rate will apply from the refi operation to be settled on Dec 13.
The ECB also raised the rate on its marginal lending facility to 4.50% from 4.25%, and its deposit rate to 2.50% from 2.25%. These rate increases also take effect on Dec 13.
The Bank of England’s Monetary Policy Committee (MPC) decided to keep the Interest Rate steady at 5.0%. This decision was widely expected by the analysts who forecasted a stability period after the sharp movements of November and August, 4.75% and 4.5% respectively. The minutes of the meeting will be published on Wednesday 20 December.