Thursday, April 7, 2011

ECB Raises Rates for the First Time Since 2008

Inflation fears in Europe have prompted the European Central Bank to raise interest rates for the first time since 2008. The bank hiked their key rate by 25 basis points to 1.25%.

This is unlikely to be a solo rate hike and it signals even more trouble for the PIIGS, since  the rate hike will have a tendency to push up all euro denominated rates, including the rate at which the PIIGS will attempt to borrow money.

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