Trichet defends ECB rate increase ahead of Portugal talks

Jean Claude Trichet, the president of the European Central Bank, has defended yesterday's 25 basis point hike in interest rates as good for the eurozone, as EU leaders prepare for talks on the bailout of Portugal.

Acting against inflation was “in the interests of all members and partners of the single European market and single currency”, and would help boost economic confidence, Trichet said yesterday, the FT reports. His comments followed the ECB’s decision to lift its main interest rate from 1% to 1.25%, threatening the most vulnerable eurozone economies such as Ireland and Portugal. The US Federal Reserve and Bank of England have yet to start tightening policy despite inflation worries. Portugal’s outgoing government was last night preparing a formal request for a possible €70bn-€80bn ($...