Malta's largest banks do not plan immediate changes to their base rate following the European Central Bank's decision to raise eurozone interest rates for the first time in three years last week.

Bank of Valletta and HSBC Bank Malta said they would continue to monitor developments in the local market.

Last Thursday eurozone interest rates climbed to 1.25 per cent from the record low of one per cent set in May 2009 as ECB president Jean-Claude Trichet said the bank moved to mitigate accelerating inflation.

A Bank of Valletta official told The Times Business yesterday the bank's base rate is influenced by market benchmark rates, including the ECB refinancing rate, "but also by other factors, such as the state of the local economy."

"Hence, the bank's interest rates are not automatically revised whenever there are movements in the ECB rate. Naturally, higher interest rates affect both depositors and borrowers, in a totally different manner. The bank will continue to monitor the situation and will revise its rates in due course in line with the prevalent economic and business climate," he added.

HSBC Bank Malta plc said it continued to monitor interest rates in the local market.

"No immediate changes to rates are planned other than to fixed rate loans where funding costs have risen," a spokesman told The Times Business. "The ECB rate increase was widely anticipated and markets have largely factored this in. The ECB's main objective clearly remains price stability. HSBC expects the Maltese economy to perform relatively well with a projected GDP growth higher than the EU average."

Yesterday the euro rose back above $1.45 as it seemed increasingly unlikely the US Federal Reserve would follow the ECB and raise interest rates.

Meanwhile, the interbank lending rate, the Euribor, has risen marginally to its highest levels since June 2009 from the beginning of the year.

It is unclear how far rates will rise in this new series of measures, particularly as growth in weaker eurozone economies could be negatively impacted.

Amid concern the eurozone interest rate rise would pile the pressure on Greece, Portugal, Ireland and possibly Spain Mr Trichet stressed the core member states "were in need of this move already some time ago".

"In that sense, the timing of the increase is a balancing act which is part and parcel of the one size fits all monetary policy," he said last week.