PARIS, Oct 5: The European Central Bank notched up its key interest rates to their highest level in five years on Thursday and signalled another rate hike by the end of the year if economic growth in the 12-country eurozone continues apace.

But the guardian of the euro remained noticeably tight-lipped on the prospect for interest rates next year.

As widely expected, the ECB raised its benchmark “refi” refinancing rate by a quarter of a percentage point to 3.25pc at its regular monthly policy-setting meeting, held exceptionally in Paris instead of the bank's Euro tower headquarters in Frankfurt.

Later, the Danish central bank followed suit, raising its key interest rate by a quarter of a point to 3.50 per cent.

But in London, the Bank of England took a different tack, holding its key interest rates unchanged at 4.75 per cent.

For the ECB, it was the fifth quarter-point move in eurozone borrowing costs since December, as the bank charts a difficult course between keeping a lid on inflation fuelled by high oil prices, while being careful not to choke off the tentative economic recovery.

Indeed, eurozone interest rates were unlikely to stop there, ECB President Jean-Claude Trichet told a news conference after the bank's regular monthly rate-setting meeting.

Even at 3.25 per cent, interest rates “remain at low levels,” the Frenchman said.

“Our monetary policy continues to be accommodative. If our assumptions and baseline scenario are confirmed, it will remain warranted to further withdraw monetary accommodation,” he said, using the central bank terminology for raising interest rates.—AFP