FRANKFURT, March 2: The European Central Bank raised its key interest rates to a three-year high on Thursday and signalled it was ready to act again any time if necessary. For the second time in three months, the ECB raised its benchmark “refi” refinancing rate by a quarter of a percentage point to 2.50pc at its regular monthly policy-setting meeting.

The last time eurozone borrowing costs stood at 2.50 per cent was in March 2003.

ECB President Jean-Claude Trichet refused to be drawn on the possible timing of future moves, insisting that the bank was ready to take “whatever steps needed to control inflation”.

“We don’t already have a plan ex-ante for future rate hikes,” Trichet insisted.

Nevertheless, the bank would continue to “monitor closely all developments with respect to risks to price stability” and it was ready to act if needed.

Future rate moves would depend on economic data, the Frenchman continued.

“We will decide to move on the basis of facts, figures, data, of our future assessment of the risks to price stability,” he said.

The bank noted inflationary risks and upgraded its forecasts for area-wide inflation for both this year and 2007.

While the bank had previously been expecting inflation to slow to 2.0 per cent next year from a current rate of 2.3pc, it was now expecting an average annual inflation rate of 2.2 per cent both in 2006 and 2007.

—AFP