Ted Scott (pictured right), director of UK strategy, F&C "The decision to raise rates is just as brave as the Bank of England's was to maintain rates, for different reasons."
"The ECB will be accused of callously endangering economic recovery and making the sovereign debt crisis even more difficult to manage, just as a third country seeks a bailout."
"There is little evidence of wage pressures within the eurozone, even in Germany which is growing robustly, and money supply growth has also been modest."
Peter Hensman, global strategist at Newton Investment Management
"Jean-Claude Trichet emphasised that the focus of the ECB remains on delivering price stability in the medium-term. He clearly emphasised that he saw the success in delivering price stability as being in the interest of all residents in the eurozone."
"This justifies the increase in interest rates even given the ongoing financial strains in the periphery of the eurozone."
"Although the ECB president indicated that the council did not decide that this was the start of a series of rate increases, the indication that the ECB sees upside risks to inflation remains, suggesting that further increases are likely."
Parus Shah, manager, FF European Special Situations Fund
"My own view is that European GDP growth will be stronger than what the consensus is forecasting, due to the strength of the eurozone’s core countries offsetting weaknesses in the periphery."
"From a stock-picking point of view, this is important as it means that there are sectors and countries which will do significantly better than others, providing good long and short stock-picking ideas."
Chris Towner (pictured below left), director of FX Advisory Services, HiFX
"It is the core of the EU that required the interest rate hike of 25bps to 1.25 per cent, whereas the peripheral economies require further loosening.""Inflation rates have pushed up in Europe to 2.6 per cent, above the European Central Bank’s 2 per cent target rate, meaning swift action was required."
"It is important to note that this inflation gap and the reaction of the money markets to Portugal’s downfall could turn into an issue for the core European economies."
"The one advantage the UK can take from not raising rates is that sterling continues to trade in under-valued territory, providing an opportunity for UK exporters to grow market share."
Stewart Robertson, senior economist UK and Europe, Aviva Investors
"Financial markets now expect European interest rates to rise a further 75bp by the end of the year to 2 per cent, then almost another 100bp throughout 2012."
"This would benefit particularly the German economy, which is growing at a reasonable rate, but is unnecessary for peripheral countries, particularly those that have had to ask the EU for a bailout or are in the process of doing so."
"The ECB will have to balance these competing demands when setting rates over the course of the next 18 months."
"In our view, this means the market has got a little ahead of itself. The interest rate is likely to be closer to 2 per cent, not 3 per cent, by the end of 2012. Our forecast is for 2.25 per cent."
Stuart Thomson (pictured right), chief economist, Ignis Asset Management
"The ECB raised its official refinancing rate by 25bps as expected on Thursday. ECB president Jean Claude Trichet denied that this was the start of a hiking cycle, but noted that the central bank was monitoring price developments closely."
"Moreover, he noted that rates were low, monetary policy was still very accommodative and that there were upside risks to price stability."
"Taken together this suggests that the famous traffic light communication code of the ECB is flashing amber, which in turn implies that the next rate hike will take place in either June or July."
"We would expect the ECB to pause over the summer to gauge the impact of tighter monetary policy on the peripheral economies."
"These economies are more sensitive to ECB policy than the core because of their higher debt levels and significantly greater sensitivity to variable interest rates."
"It is clear that the combination of tighter policy and currency appreciation in these economies will exacerbate the fiscal squeeze on domestic demand."
"This will cast some doubt over the probability of a further rate hike in October, but we believe that further acceleration of headline inflation over the summer will provide this serial offender of monetary policy mistakes to make the final rate hike."
"This will contribute to a significant slowdown of European growth in 2012 and more severe problems for the peripheral economies, which will ultimately result in debt restructuring for the smaller economies such as Greece, Ireland and Portugal."