trichet euro ecb

Headline: The ECB has increased interest rates by 0.25%, to 1.25%.

Background: The ECB was expected to hike rates today, due to rising energy costs within the eurozone. Headline inflation beat expectations in March, at 2.6% year-over-year.

The impact of the rate hike remains unknown. The last time the ECB hiked rates, markets tanked shortly thereafter.

This rate hike has the potential to damage already weakened economies on the fringe of the eurozone, notably Spain and Ireland, where troubled housing sectors will be slammed by a hike in interest rates.

But for those who aren’t aware, the ECB is only concerned about price stability, not unemployment within the eurozone. So it’s policy decisions are only targeted at containing inflation, or deflation.

Don’t miss: 8 shocks Citi believes will slam the global economy >

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at