Worried about rising prices, the European Central Bank raised its benchmark interest rate for the first time since 2008 on Thursday, risking damage to weaker economies like Portugal, which only a day ago became the third country to request an international bailout.
A short time earlier, Britain’s central bank left its benchmark interest rate at 0.5 percent despite similar inflation concerns, after recent economic data painted a mixed picture of the strength of Britain’s recovery. The central bank also kept its bond-purchase plan at £200 billion, or $325 billion.
But the E.C.B. is taking a more hard-line approach in raising its rate to 1.25 percent from the historic low of 1 percent, where it has been since the depths of the global financial crisis. The bank president Jean-Claude Trichet and other members of the governing council had warned repeatedly over the past month that they were worried that higher oil prices would fuel a general increase in prices.
Many economists and political leaders said that a rate increase for the euro zone was premature and unnecessary, arguing inflation is not a problem when factories are still not operating at full capacity, and that higher inflation is solely the result of volatile commodity prices.
