Enter multiple symbols separated by commas

Euro Zone Rates Remain at 4%; U.K. Rates Rise to 5.75%

The European Central Bank kept interest rates steady at 4% Thursday, as widely expected.

"Risks to price stability in the medium term remain on the upside," Trichet said in a press conference following the announcement, while refraining from using the codeword "vigilance." The statement left the probability for a rate hike in the next meeting low, but left the door open for hikes later in the year.

Trichet traditionally uses "vigilance" when talking about inflation to signal an imminent rate hike.

The next ECB rate hike is expected to be in September or October, according to 93 analysts surveyed by Reuters ahead of the announcement.

Trichet indicated that the current expectations of many economists for the ECB to hike in October is on target.

"No change in the market expectation is in the message of the governing council, but as you know we never pre-commit," Trichet said when asked at the press conference if an October hike was still likely.

The ECB has raised rates about once every quarter since December, managing to keep inflation at bay and growth from stalling.

Unemployment in the euro zone is at a record low of 7%; inflation remains around the bank's target of "close to but below" 2% across the 13-nation region of more than 317 million residents who account for more than 15% of the world's economic production.

Still, with housing costs cooling off and mixed reports on German investor and business confidence, some experts wonder whether further increases are in the cards beyond September, when the ECB is expected to lift rates to 4.25%.

BOE Raises Rates

The Bank of England raised overnight lending rates by a quarter point Thursday to 5.75%, as expected. It is the fifth hike since last August and continues the Monetary Policy Committee's strategy of cooling inflation.

"The margin of spare capacity in businesses appears limited and most indicators of pricing pressure remain elevated," the BoE's Monetary Policy Committee said in a statement.

"The bank is obviously concerned that current inflation pressures and the sense of pricing powers that companies have is quite elevated, which is why they've moved today, Andrew Bell, European strategist at Rensburg Sheppards, told "Power Lunch Europe," adding, "there's a chance they'll do a back-to-back move next month."

Contact U.S. News


    Get the best of CNBC in your inbox

    Please choose a subscription

    Please enter a valid email address
    To learn more about how we use your information,
    please read our Privacy Policy.

Don't Miss

  • Ferrari 488 Spider

    Ferrari's new 488 Spider will have a V-8 turbo engine and a retractable hard-top roof that lowers in just 14 seconds.

  • Members of the New Horizons science team react to seeing the spacecraft's last and sharpest image of Pluto before closest approach later in the day at the Johns Hopkins University Applied Physics Laboratory (APL) in Laurel, Maryland July 14, 2015.More than nine years after its launch, a U.S. spacecraft sailed past Pluto on Tuesday, capping a 3 billion mile (4.88 billion km) journey to the solar system's farthest reaches, NASA said.

    The New Horizons Pluto flyby mission set records for NASA's social media and web metrics——but why do we care so much?

  • Thomas Lee

    This year's flat market is reminiscent of 1904, says Thomas Lee of Fundstrat Global Advisors in an interview with Amanda Drury.

U.S. Video

  • 3 key things to watch from Facebook's earnings

    Neil Doshi of Mizuho Securities USA says there are 3 key things to watch when Facebook reports earnings.

  • Outgoing P&G CEO on decision to step down

    Outgoing CEO of Procter & Gamble A.G. Lafley, discusses his decision to step down, and David Taylor to be named the next CEO. Lafley says you only have one choice in this world - "you get better every day," and that's what his company will do.

  • Yelp CEO remains optimistic

    Yelp CEO Jeremy Stoppelman says the company will ramp up its marketing efforts for the third and fourth quarters. CNBC's Josh Lipton provides insight from the earnings call.