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European Central Bank Hints It Will Raise Interest-Rates In April!

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After all the claims from the Bank of England that inflation is temporary it looks like the European Central Bank takes a different view...

After the ECB left rates at a record low 1pc, Mr Trichet said inflation pressures had increased since the ECB last met a month ago, largely due to a rise in commodity prices.

He added price risks were on the upside.

"Strong vigilance is warranted with a view to containing upside risks to price stability," Mr Trichet said.

The ECB used the phrase "strong vigilance" repeatedly during its 2005-2007 rate hike cycle, typically one month before it raised rates, although there were exceptions to that rule.

Mr Trichet was not explicit as to whether the verbal signal still holds good. He said an April rate rise was not certain but sounded notably hawkish

"When we have a shock - and we have a shock - our responsibility is to prevent a second round of effects [from high oil prices]," he said.

In his opening statement, he also pointedly did not say that rates were at an appropriate level.


As one of the comments already points out I wonder what the Bank of England will make of that...

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