European Central Bank raises rates

Trichet was scheduled to give a news conference later Thursday,and analysts and investors were expected to be listening closely for indications of how quickly the ECB might adjust rates in the future.

Trichet was also expected to face many questions about how the ECB might react to plans by European governments to get private investors to share in the cost of Greek debt relief.

Rating agency Standard amp; Poors warned Monday that a French plan for private sector involvement might be considered a default,an event that could shake the European banking system and impair the ECBs own substantial holdings of Greek debt.

Economists at Nomura International forecast that the ECB would raise the benchmark interest rate a quarter point again in October and then about every three months next year. That would raise the rate to 2.75 per cent by the end of 2012,its highest level since 2008,before the collapse of Lehman Bros prompted the ECB and other central banks to take emergency measures to stabilise the global financial system.

However,the bank could raise rates more gradually if there are signs that inflation pressures are easing or that the euro area is growing more slowly. Inflation for the past several months has been above the ECB target of about 2 per cent.