The European Central Bank has raised interest rates to 1.5% from 1.25% in an effort to curb inflationary pressures.
Euro zone inflation remained at 2.7% in June - softer than expected, but well above the bank's target of just under 2%.
The increase was the second rise since April.
ECB president Jean-Claude Trichet said inflation would be monitored very closely,
The BBC reports this was seen as a signal that rates are likely to rise further.
The rise was widely expected after Mr Trichet indicated last month that such a move was likely.
Earlier on Thursday, the Bank of England kept rates in Britain at a record low of 0.5%. Rates have been held at this level for more than two years.
