European Central Bank begins interest rate increases..

[Trajan]

Clearly they expect this to be a major and sustained move.

man, wish we could do that, but our econ. is still to weak, in fact we may need more 'QE', or something, becasue, as a 'strategery', its played, its gone as gar as it can take us, we need another one, QE 2 is supposed to conclude in May.


FRANKFURT—The European Central Bank on Thursday raised its benchmark interest rate to 1.25% from a historic low of 1%, making it the first of the developed world's major central banks to begin raising rates as the economy recovers from recession.

The move, which marks the ECB's first rate rise since July 2008, comes despite the deepening debt crisis in the euro zone's periphery, after Portugal became the third nation in the 17-country bloc to ask for an international bailout.

ECB President Jean-Claude Trichet indicated Thursday that the ECB will proceed cautiously after deciding to raise credit costs, citing worries that financial-market tensions could spill over into the economy.

The widely anticipated step means the U.S. Federal Reserve, the Bank of Japan and the Bank of England now lag the ECB in reversing low-interest policies.

"We didn't decide today that it was the first of a series of interest-rate increases," Mr. Trichet said. "We will continue to do in the future as we have done in the past, to take the appropriate decisions for price stability."

Risks to the economy are broadly balanced, with market interest rates still at low levels to aid economic growth, he said.

more at-
ECB Raises Interest Rates - WSJ.com

 

[Blagger]

Will this move be affected (retracted, even) by Portugal's pleas for an EU bailout yesterday?

 

[Toro]

Tichet played down expectations that this is the beginning of a sustained rise interest rates. However, they certainly aren't going down from here.

Frankly, its hard to believe that they are raising rates when the European banking system is in such dire shape.

 

[william the wie]

Tichet played down expectations that this is the beginning of a sustained rise interest rates. However, they certainly aren't going down from here.

Frankly, its hard to believe that they are raising rates when the European banking system is in such dire shape.

This should lead to outsourcing of jobs to the US as the Euro heads to infinity and beyond. Why the ECB should want such a result I have no idea either.

 

[Pepe]

The first of Trichet's three promised Rate Hikes does not bode well for Greece, Ireland, Portugal and quite possibly Spain along with Belgium.

This may be the beginning of the end for the Euro or for the above mentioned countries participation in the common Euro area.

 

[william the wie]

The first of Trichet's three promised Rate Hikes does not bode well for Greece, Ireland, Portugal and quite possibly Spain along with Belgium.

This may be the beginning of the end for the Euro or for the above mentioned countries participation in the common Euro area.

Quite possibly true within six months if the course remains the same. However killing Germany's export machine with a higher priced Euro may cut this policy short or it may not. In either case the PIIGS bailout will be gone within a year.