ECB raises interest rates despite pressure from EU capitals

The European Central Bank (ECB) on Thursday (3 July) raised its key interest rate - from 4 to 4.25 percent - for the first time in more than a year in response to soaring inflation in the euro area.

The ECB's chief, Jean-Claude Trichet, said the bank's decision was motivated by its assessment of the ever increasing risk to price stability in the past few months.

"Against this background, it is imperative to ensure that medium to longer-term inflation expectations remain firmly anc...