The ECB, which has already raised rates once this year, opted for a second increase to quell inflation which remains above target.
It said in a statement: “The interest rate on the main refinancing operations of the Eurosystem will be increased by 25 basis points to 1.50%.”
The move was widely expected after President Trichet signalled last week the ECB would be “vigilant” on price increases.
The ECB’s aims to keep the annual inflation rate below 2%, but June’s figures showed it was at 2.7%, despite the first rate rise in April.
Rathbones head of Multi-Asset, David Coombs, said the ECB is mistakenly modelling its monetary policy “with the German economy in mind”.
“This is exactly what happened in the early days of the eurozone, which led to the boom in the peripheries, and ultimately to the mess which we are trying to clear up now,” he said.
“Monetary policy needs to accommodate the whole of the eurozone, or it will be very difficult for the peripheries to recover or remain part of the euro.”
Meanwhile, financial markets are increasingly backing Trichet to shun further hikes before he concludes his mandate in October, the FT reports.
