ECB hints at new interest rate increase
The European Central Bank (ECB) signalled Thursday that a further increase in eurozone interest rates was on the cards after warning of the risks of inflation.
The ECB's monthly bulletin said its analysis of the economy "has also confirmed that the medium-term outlook for price stability remains subject to upside risks."
"Given the positive economic environment in the euro area, the ECBs monetary policy is still on the accommodative side, with overall financing conditions favourable, money and credit growth vigorous, and liquidity in the euro area ample," it said
The Eurozone's main refi rate currently stands at 4.0 percent.
The ECB has raised eurozone borrowing costs a total of eight times since December 2005, each time by a quarter of a percentage point, as it tries to keep a lid on inflation.
The use of the term "accommodative" means that borrowing costs are low enough to support growth, but could contain some inflationary risk and is understood by ECB watchers as an indication of future rate rises.
"Looking ahead, acting in a firm and timely manner to ensure price stability in the medium term remains warranted," the Bank said.
Last week Bank chief Jean-Claude Trichet had hinted that the Frankfurt-based central bank could raise its key interest rates again in September or October.
AFP
