At February’s press conference, President Trichet looks set to maintain a fairly hawkish tone, adding to fears that the ECB might raise interest rates later this year and possibly placing further upward pressure on the euro. The ongoing problems in the peripheral euro-zone economies should mean that the Bank will keep open the option of buying more government bonds and offering generous loans to commercial banks. But with annual core CPI inflation at just 1.1% and few signs that inflationary pressures are building, we still think that interest rate hikes remain a distant prospect.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services