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November 18th 2005

ECB about to hike interest rates

Due primarily to lackluster investment and economic growth, inflation has not concerned EU central bankers in recent years. Core inflation is a meager 1.3%, well below the EU benchmark interest rate of 2%. Now, however, rising energy prices have begun to affect consumer spending habits as well as raised production costs for many businesses. A great deal of circulation has swirled over whether the ECB will preemptively head off inflation by hiking interest rates at its December meeting. The consensus among economists and EU officials is of overwhelming support for a rate hike for such inflationary reasons. Today, Jean Trichet, President of the ECB confirmed the inevitability of a rate hike, which provided support for the Euro. The Financial Times reports:

Trichet said the ECB was “ready to take a decision to move interest rates and moderately augment the present level of intervention rates in order to take into account the level of risks to price stability”.

Read More: Euro fights back as Trichet signals rate hike

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Posted by Adam Kritzer | in Central Banks, Euro | No Comments »

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