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According to Vitor Constancio, he is the European Central Bank council member, a high medium term interest rates are positive in a medium term outlook in terms of inflation.
He said that “In the market, the correct reading, is that this reflected the assessments in the growth of the markets,"
He also added that in the progressive countries a higher medium term rates does not mean no fears for inflation in the future but rather it means that these medium term rates is a consequence in assessing growth, thus good for inflation in the medium terms.
He made this remarks in the fringes in the yearly meeting of Bank for International Settlements.
Increasing in the medium term interest rates, thus follow the long spell of inertia, after the raised interest rate in the ECB to 25 basis point to 8 times since the beginning of the monetary tightening on December 2005.
ECB has already increased last June 6, the refinancing minimum bid rate to 4%.
They will be monitoring the upward price risk closely amidst the ample liquidity, capacity utilization in high level, the volatile pricing in oil, and a strong money and credit expansion thus the future policy move is data dependent.
22:31
Posted on Jun-24-2007
