European Central Bank President Jean-Claude Trichet said that following today’s rate rise, monetary policy was helping to achieve price stability.
After raising rates for the first time in more than a year, Mr Trichet told a news conference that maintaining price stability in the medium term was the bank's main objective and there was a "strong determination" to keep inflation expectations anchored.
"On the basis of our current assessment, the monetary policy stance following today's decision will contribute to achieving our objective," Mr Trichet said.
"We will continue to monitor very closely all developments over the period ahead," he said, adding that there were upside risks to price stability over the medium term.
The ECB raised rates as expected, by 25 basis points to 4.25 per cent.
Mr Trichet stunned markets last month by saying a July rate rise was possible. He also penned a new entry in the ECB's anti- inflation lexicon - "heightened alertness", avoiding the word "vigilance" which had been used as a signal for imminent action
when the ECB was raising rates steadily in 2006 and the first half of 2007.
He did not use either phrase in his opening remarks at today's news conference.