ECB hikes rate to 1.25 per cent

The European Central Bank (ECB) raised interest rates as expected from one per cent to 1.25 per cent.

The 25-basis-point rise was largely anticipated by traders since the President of the ECB, Jean-Claude Trichet, and some of his fellow Bank members said it was time to get tough on inflation last month. It represented the first rate change in almost three years.