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The European Central Bank opted to leave its main refi interest rate unchanged at 4 percent on Thursday.
However, European interest rates are expected to continue higher next month, by at least a quarter of a percent, having risen from 2 percent in December 2005 and by 1 percent in the last year.
However, if September’s interest rate goes ahead as expected, they are expected to remain unchanged thereafter, at least in the short term.
Governor of the European Central Bank, Jean Claude Trichet today raises speculation that rates will rise next month as he warned that “strong vigilance” is needed to keep inflation in the euro-zone under control.
He said it was the ECB’s aim that “risks to price stability over the medium term do not materialize”.
Although inflation rates within the euro-zone are still within the ECB’s targets, and Trichet refused to comment on the future movement of interest rates, a hike next month is still widely expected.
Trichet this week echoed messages coming from the ECB recently that the European economy is in a very healthy position and is likely to continue growing.
Last week he told German daily Die Zeit that he is not overly concerned by the crisis in the sub-prime mortgage market in the United States and the strength of the Euro against the US dollar.
He added that he is pleased with current state of credit markets in the euro-zone, saying the last few weeks have seen a correction of the under appreciation of risks in certain areas of the global finance system.
Meanwhile, the Bank of England followed suit on Thursday as it kept its key interest rate unchanged at 5.75 percent.
16:13
Posted on Aug-03-2007
