Interest rates rose across Europe on Thursday as the European Central Bank increased rates by an expected quarter point to 3 per cent, while the Bank of England surprised markets with an equivalent rise of its main interest rate to 4.75 per cent.

The world’s leading central bankers are now as one in tightening monetary policy. Thursday’s European rate rises followed swiftly on the Bank of Japan’s move to end its long-standing zero interest rate policy and the Federal Reserve’s quarter-point rate rise to 5.25 per cent late last month. Australia this week also raised its key rate by 25 basis points to 6 per cent.