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Trichet's upbeat comments on euro zone economy signal more rate rises

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Trichet's upbeat comments on euro zone economy signal more rate rises

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European Central Bank President Jean-Claude Trichet has signalled that more euro zone interest rate rises are coming. He told the European Parliament’s economic and monetary committee in Brussels that policy makers are not “satisfied’‘ with the level of inflation in the region and its economy is growing: “Investment is expected to grow robustly, benefiting from favourable financing conditions, corporate balance sheet restructuring and gains in earnings and in business efficiency. “Furthermore, we expect consumption growth to further strengthen gradually over time, in line with the developments in real disposable income, as the labour market situation and in particular employment growth gradually improves.”

Trichet’s comments on growth were his most upbeat in a long time. That caused the markets to increase their bets that there will be further interest rate rises this year. The ECB has put up borrowing costs three times since last December, to 2.75%.