As expected, the European Central Bank has left interest rates unchanged at 3%. However economists are convinced there will be another increase, probably in October, as ECB President Jean-Claude Trichet gave a broad hint. During his news conference he used the phrase “vigilance” over inflationary risks; previously that has been a signal of a rate rise to come.
Trichet said: “It is essential that inflation expectations remain firmly anchored at levels consistent with price stability. Accordingly, strong vigilance is warranted in order that risks to price stability are contained.” The decision to hold rates unchanged this time came despite promising second-quarter economic growth in the region.