The European Central Bank (ECB) on Thursday raised its benchmark refinancing rate by a quarter of a percentage point to 3.25 percent.

The decision was announced by ECB President Jean-Claude Trichet at a press conference, after the bank raised the key interest rate to its highest since early December 2002, at a regular monthly policy-setting meeting held here, instead of Frankfurt.

This was the fifth quarter-point rise in 10 months as the central bank continues its efforts to keep a check on inflation.

However, inflationary pressures are easing as oil prices have cooled down. Euro zone inflation was 1.8 percent on a 12-month basis in September, below the ECB's 2-percent ceiling.

The ECB chief added that further hikes could be expected since interest rates in the 12-nation zone remained at low levels.

The official also struck an upbeat note that the economy of the 12 countries, which use the single currency, was likely to grow through next year, although there would be some volatility.

The rise was widely expected and economists predicted the refinancing rate could be further raised to 3.5 percent by the end of this year.

VietNamNet/Xinhuanet