FRANKFURT, July 3: The European Central bank raised eurozone lending rates on Thursday to fight record inflation but ECB chief Jean-Claude Trichet signalled the bank had not embarked on a series of hikes.

With the bank’s main lending rate now at a seven-year high of 4.25 per cent, Trichet told a press conference its monetary policy “will contribute to achieving our objective” of price stability, a code phrase that suggested more increases were not immediately at hand.

“The bank seems now in a wait-and-see mood,” commented BNP Paribas economist Clemente De Lucia, before adding: “Should risks to price stability increase further, the bank will be ready to act.”

Outside the eurozone, central banks in Denmark and Sweden both raised their benchmark rates by a quarter of a point to 4.60 per cent and 4.50 per cent respectively on Thursday to curb price increases felt by consumers around the world.

Trichet said several times the ECB governing council now had “no bias” with respect to monetary policy, which several analysts said also pointed to little change in the near-term.

The council’s unanimous decision came after eurozone inflation hit a record 4.0 per cent in June. But despite signs that business activity was beginning to suffer, Trichet said “the economic fundamentals of the euro area are sound.”

Taking the first two quarters of 2008 together, policymakers had concluded the 15-nation zone could expect “moderate ongoing growth” this year, he added.

While media and analysts have raised the spectre of high inflation combining with stagnating economic growth, Trichet said: “I think that there is nobody saying at the present moment that at the global level we are embarking in a stagflation episode.”

He acknowledged however that the bank’s growth outlook was subject to high uncertainty owing “not least to the very high levels of commodity prices,” in particular oil, which had just set a new record above $146 a barrel.

Trichet said oil consumers must accept higher prices because demand had risen.—AFP