ECB: Trichet’s final interest rate hike ?

ForexNewsNow | Published on July 7, 2011 at 4:00 am

Despite a global economic slowdown, today the European Central Bank is set to raise the interest rate by 0.25%, from 1.25% to 1.5%, at its policy setting meeting at 12:45 P.M., GMT. Most economists agree this move should not have a dramatic effect on the global financial markets as long as the ECB does not intervene again – at least until the end of 2011.

European Central Bank President Jean-Claude Trichet announced his intention to raise the interest rate last month citing rising inflation pressures in the euro zone.

The euro zone inflation rate stabilized at 2.7% in June after reaching a peak of 2.8% in April. Inflation is expected to remain well above 2% – a rate which the ECB has defined as the upper limit of the threshold for tolerable inflation – until the end of the first quarter of 2012, according to Natixis, a branch of the second-largest investment bank in France.

Gilles Moec, an economist at Deutsche Bank noted that “the underlying inflation (excluding food and energy) rose to 1.8% in April and has remained quite high until now.”

According to Oddo Securities, a French research firm, the ECB’s slight tightening of monetary policy should be “Jean-Claude Trichet’s last rates raise,” before his scheduled departure from the position of ECB president in late October.

 

For more exclusive content, follow us on Twitter or join us on Facebook.

Comments

Subscribe

Sign up for our Newsletter

Top Forex Brokers

CySEC/FSA Regulated
$5 Min. Deposit
Welcome bonus of $30
T&Cs apply
Social Trading
$50 Free Bonus
Old Broker
Own Trading Platform
US Traders
Social Trading

Binary Options Video