Dollar rises against the euro and British pound

Jean Claude Trichet, president of the European Central Bank, addresses the European Parliament Wednesday July 9, 2008 in Strasbourg eastern France. (AP Photo/Christian Lutz)

NEW YORK—The dollar was mixed Thursday after the Bank of England left interest rates unchanged, signaling with its peers that inflation was more pressing than growth.

The 15-nation euro bought $1.5783 in late New York trading, up slightly from the $1.5746 it bought Wednesday.

The British pound fell to $1.9775 from $1.9818 after the BoE left its benchmark rate at 5 percent. It was the third straight month the bank left rates steady after making two cuts earlier in the year that brought it down from 5.5 percent.

Higher rates can quell inflation and growth as money becomes more expensive to borrow.

"The Bank of England was always likely to keep interest rates at 5 percent given the current horrible mix of markedly slowing economic activity and rising price pressures," said Howard Archer, the chief economist at Global Insight.

"The economy will be essentially stagnant in the second half of this year as purchasing power is squeezed heavily and consumer confidence is further undermined by rising unemployment and falling house prices," he said.

Meanwhile European Central Bank President Jean-Claude Trichet told European Parliament lawmakers Wednesday that unchecked wage increases could result in higher prices across the euro zone.

The ECB's governing council "is strongly concerned that price and wage-setting behavior could add to inflationary pressures," he said, adding that current inflation levels were "worrying," and set to stay high before cooling gradually next year.

In other trading, the dollar rose to 107.02 Japanese yen from 106.83 yen late Wednesday. The dollar slipped to 1.0087 Canadian dollars from 1.0111, and weakened to 1.0275 Swiss francs from 1.0291.