ECB raises rates

As expected, the ECB raised interest rates on Thursday. Reuters reports:

The European Central Bank raised interest rates for the first time since the 2008 financial crisis on Thursday and signaled it was ready to tighten policy further if needed to check rising prices.

ECB President Jean-Claude Trichet used phrasing at a news conference traditionally seen as associated with further swift hikes, saying the bank's monetary policy "remains accommodative" and that it will "monitor very closely" price risks.

But he stressed the ECB had not decided that Thursday's move -- a 25 basis point rise in its main refinancing rate to 1.25 percent -- was the first in a series of moves, reassuring markets it was not about to embark on an aggressive tightening policy that could choke the euro zone's struggling periphery.

The rate hike came even though core inflation in the euro area has remained subdued so far. From Reuters:

Domestically generated inflation in the euro zone is subdued, with the single currency bloc's recovery on track, but economic growth comparatively weak and unbalanced, the European Commission said on Thursday.

In its quarterly report on the 17-nation euro zone, the European Union's executive said that the main reason for the acceleration of headline inflation -- to an annual rate of 2.6 percent in March -- was higher commodity and fuel prices.

But Thursday did bring yet more positive economic data from Germany. Bloomberg reports:

German industrial production rose three times as much as economists forecast in February, adding to signs economic growth accelerated in the first quarter.

Output increased 1.6 percent from January, when it gained 2 percent, the Economy Ministry in Berlin said today. Economists had forecast a 0.5 percent gain for February, according to the median of 33 estimates in a Bloomberg News survey. In the year, production rose 14.8 percent when adjusted for working days.

In the UK, the Bank of England left its benchmark interest rate and bond-purchase programme unchanged.

The Bank of Japan also left interest rates unchanged on Thursday but announced a new lending programme. AFP/CNA reports:

The Bank of Japan (BoJ) on Thursday warned that the economy faced "strong downward pressure" due to the March 11 earthquake and tsunami, and unveiled a one trillion yen ($11.7 billion) lending programme.

It left its key rate unchanged at between zero and 0.1 per cent.

The new lending programme offers cheap one-year loans to ensure financial institutions in disaster-hit areas can meet demand for post-quake reconstruction funding, the bank said in a statement.

But Japan's quake-related problems appear never-ending as it got hit by yet another earthquake on Thursday. AFP/CNA reports:

A powerful 7.1-magnitude earthquake late on Thursday hit the same area of Japan that was ravaged by disaster a month ago, seismologists said, prompting a local tsunami alert that was later cancelled.

Power was cut to parts of the northeast of the country, much of which is still struggling with the effects of the monster tsunami that roared ashore four weeks ago.

The new quake caused a handful of injuries, national broadcaster NHK said, but there were no reported deaths.