President of the European Central Bank (ECB) Jean-Claude Trichet
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ECB president on raising interest rates

The European Central Bank (ECB) has raised interest rates to 1.5% from 1.25% in an attempt to cool inflation in the 17-nation eurozone.

The move is an attempt to stem Eurozone inflation, currently at 2.7 per cent, and prevent core economies, such as Germany, from overheating.

But the rise adds to the pressure on struggling economies such as Greece and Portugal.

ECB president Jean-Claude Trichet said inflation would be monitored "very closely", seen as a signal that rates are likely to rise further.