Frankfurt, 27/04/2000 (Agence Europe) - The European Central Bank decided on Thursday to increase its key rates by a quarter point on Thursday, in order to prevent inflationary risk in the euro zone. Its main short term interest rate, the refinancing rate (Refi), thus goes from 3.5% to 3.75%. The two other ECB rates, the lower and the upper rate, become 2.75% and 4.75% respectively.
"With this decision, the ECB Governing Council continues its policy consisting of reacting in a preventive manner to the risks of increase on medium-term price stability", explained the ECB in a press release published after the Governing Council on Thursday. This decision constitutes the best contribution that the monetary policy can make to guarantee the sustainable nature of the current phase of sustained and non-inflationary economic growth, it reads.
In the current context of strong economic growth, the ECB considers there is a risk for price stability linked to the strong growth of monetary and credit aggregates, but also to the low euro exchange rate. The Government Council spoke of the recent developments in the exchange rates between main currencies and mainly of the recent fall in the euro, the press service states, continuing by saying that the ECB considers the current level of the euro does not reflect the good fundamental economic situation of the euro zone.
This rise, which was expected being the fifth since 1 January 1999, had been largely anticipated by the markets. It has not prevented the fall in the euro, which against reached its lowest historic level on Thursday compared to the dollar.