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ECB's 2008 Rate Hike Revisited: The Crisis It Didn't See Coming

  • Rates were raised a decade ago, just before Lehman collapsed
  • Ten years on, most policy makers say they had to cool prices
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Ten years since the ECB raised rates, what determines its path this time around? Bloomberg’s Jana Randow reports.Source: Bloomberg
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Ten years since the European Central Bank raised interest rates, only to reverse course within months after Lehman Brothers Holdings Inc. collapsed and markets seized up, policy makers are still defending their action.

The decision on July 3, 2008, to lift the benchmark rate a quarter point to 4.25 percent was seen by investors as risky, but then-President Jean-Claude Trichet said at the time that it was needed to curb inflation. He also said the 21 Governing Council members were unanimous.