The European Central Bank did not change its benchmark refinancing rate on hold Thursday, but it is expected that ECB chief Jean Claude Trichet will raise the rate at the bank's next meeting in June. As forecast, the ECB 19 kept borrowings costs unchanged at 3.75 per cent.

Trichet is expected to announce at the governors meeting in Dublin that ECB is planning to raise the rates by what analyst predict will be another 25 basis points increase in the cost of money in June.

This would raise the bank's benchmark refinancing rate to 4.0 percent and represent the eighth increase in borrowing costs in the 13-member eurozone since the ECB launched its rate-hiking cycle in December 2005.

Thursday, the Bank of England raised the UK base rate from 5.25 percent to 5.5 percent to set the stage for raising borrowings costs again before the end of the year. British inflation climbed to 3.1 percent in March, well above the Bank of England's two percent target.

Since then the euro has hit an all-time high of 1.3682 against the dollar and data has confirmed that eurozone inflation remains within the ECB's two percent target.

"The economy in the euro country is in a situation, in which low interest does not appear appropriate any more," said Karsten Junius economist with Germany's Deka Bank.

In the meantime, figures released last month showed continuing robust growth in credit in the eurozone with the money supply expanding at its fastest pace in almost 25 years in March.