UPDATE 6-ECB raises rates, Trichet open on future moves

* ECB raises interest rates by 25 bps to 4.25 pct, as expected * Trichet says no policy bias, new rates help price stability * Fewer economists expect rate rise to 4.5 pct by year-end * Euro weakens versus dollar, short-dated Bund prices surge after Trichet perceived as dovish

By Marc Jones

FRANKFURT, July 3 (Reuters) - The European Central Bank raised interest rates to their highest level in nearly seven years on Thursday, but dimmed the prospect of further moves, as euro zone growth looks set to falter despite soaring inflation.

After the ECB raised rates to 4.25 percent from 4 percent in a widely expected move, Trichet said this was needed to help get record euro zone inflation back under control.

"The monetary policy after today's decision will contribute to achieving our objective of price stability," he told a news conference, describing the decision has unanimous unlike last month's three-way split.

But Trichet evinced no desire on the part of the Governing Council to change monetary policy again soon.

"Starting from here I have no bias. You know of course our constant position which is part of our monetary policy -- we have no pre-commitment on the medium term."

The euro weakened against the U.S. dollar EUR= after Trichet's comments dampened markets' earlier expectations of another rate rise this year, and fewer economists forecast rates would hit 4.5 percent in a Reuters poll after Trichet spoke.

Nonetheless, trade unions strongly criticised even the one rate rise.

"The ECB's decision is dangerous, counterproductive and not necessary. It's the European economy and European workers that risk paying the price for this," the European Trade Union Confederation said in a statement.

The Organisation for Economic Cooperation and Development, which conducts economic research for industrialised economies, welcomed the decision, however, and said it was inevitable given inflation pressure in the euro zone.

The ECB's main role is to keep inflation below 2 percent over the medium run, and consumer prices are currently rising at an annual 4 percent, the fastest pace since the euro's launch.

But unions and many economists believe the ECB has overestimated the strength of the euro zone economy in the face of a potential U.S. recession, sliding property prices in some parts of the bloc and unresolved bank funding problems.

A senior economic adviser to the German government, Bert Ruerup, told German newspaper Tagesspiegel that it was doubtful if a rate rise was the right response to inflation caused by soaring food and fuel costs rather than an overheating economy.

Trichet warned that after a better-than-expected first quarter, growth later this year would be weaker, although economic fundamentals were still strong.