Archives - Economics: Page 28
Author: paul carson (Fri Mar 03, 2006 12:20 pm)
Title: economy
THE EUROPEAN CENTRAL BANK ON THURSDAY RAISED INTEREST RATES FOR THE SECOND TIME IN THREE MONTHS AND SIGNALED MORE INCREASES TO COME.
The decision, which had been widely expected, lifted the bank's rate by a quarter-point, to 2.5 percent — a level that its still very low. Rising oil prices have pushed up inflation warranting tighter credit.
The euro rose against the dollar Thursday, settling at $1.2033 in New York, up from $1.1915 late Tuesday, as currency markets reflected the likelihood of tighter monetary policy. Economists generally expect the bank to act again in June. Some European politicians, fear that tightening credit even slightly will choke off a fragile economic recovery on the Continent. The bank's forecasts would suggest a future upward move on rates. Its revised projections, for example, foresee inflation running solidly above 2 percent this year and in 2007. The bank's goal is to keep inflation at or below the 2 percent threshold.
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