ECB hikes refi rate to 3.25 pct from 3.00, as expected

The European Central Bank raised its key interest rates, hiking the minimum bid rate on its main refinancing operations to 3.25 pct from 3.00 pct. The decision was taken at today's meeting of the ECB governing council in Paris and was fully expected by financial markets after ECB president Jean-Claude Trichet signalled such a move at the ECB's previous news conference. The new minimum bid rate rate will apply from the refi operation to be settled on Oct 11. The ECB also raised the rate on its marginal lending facility to 4.25 pct from 4.00 pct, and its deposit rate to 2.25 pct from 2.00 pct. These rate increases take effect Oct 11. Trichet will hold a news conference at 2.30 pm to explain the thinking behind the rate hike. Markets will be looking for indications from Trichet on the prospects for further rate hikes. The ECB has now raised rates five times since last December, each time by 25 basis points, and economists expect at least one more tightening move.