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Euro interest rates ‘to rise’ from October

Eurozone interest rates could rise to four per cent by the end of the year, according to EU financial analysts.

The governing council of the European central bank meets this week for its monthly assessment of interest rates, and while no hike is expected in September, most observers believe rates will rise again from October.

ECB chairman Jean Claude Trichet has consistently warned that the bank would not hesitate to increase rates if it thought it necessary to keep spiralling inflation under control.

The steady rise in oil prices, caused by continuing instability in the Middle East, has pushed up overall consumer prices above the bank’s two per cent ceiling, and the ECB remains “vigilant”, in Trichet’s words, about the long-term effect on the eurozone economy.

But any rate rises are unlikely to come this month, with most analysts believing that Thursday’s meeting will simply lay out some of the groundwork for an October increase to 3.5 per cent.

Some analysts polled by FT Deutschland suggested that rates could rise as high as four per cent by the end of the year, but most expect to see them pegged at 3.75 per cent by December.

http://www.eupolitix.com/EN/News/200608/b6c702b2-15fc-47db-aef6-789af3fde137.htm