European Central Bank president Jean-Claude Trichet has hinted the ECB may be forced to raise interest rates as early as next month to curb significant recent inflation increases.
While the ECB kept rates at 4% yesterday, Trichet warned a rate rise next month at he July meeting was “possible”.
The aggressive talk from the ECB chief would have been noted by the Bank of England, which also decided to hold rates at the current 5% level.
Year-on-year inflation has jumped 3.6% in the eurozone last month, ahead of the 3% official figure for the UK.
“HICP inflation is now expected to remain high for a more protracted period than previously thought,” Trichet says.
“We emphasise that maintaining price stability in the medium term is our primary objective in accordance with our mandate.
“The Governing Council is monitoring very closely all developments. It is in a state of heightened alertness.”IFAonline
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