The European Central Bank has signalled the growing threat of inflation could prompt it to raise interest rates across the eurozone sooner than expected.
The bank’s president Jean-Claude Trichet said evidence of “short-term” upward pressures on prices, mostly due to the cost of energy, had not “so far” affected the bank’s view on price stability but required “very close monitoring”, writes the Telegraph.
The move marked a turning point in attitudes at the bank from a neutral stance to a leaning towards more tightening, although it left interest rates at a record low of 1% on Thursday.
Economists at Citi now expect a rate rise in the second half of this year – probably before Mr Trichet’s term ends on October 31 – rather than the start of 2012.
