Eurozone inflation rises
Source: Agencies |
July 1, 2011, Friday
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Print Edition
Print Edition
INFLATION in the 17 countries that use the euro remained markedly above the European Central Bank's target in June, official figures showed yesterday, reinforcing market expectations that the bank will raise interest rates again next week.
In its first estimate, Eurostat, the EU's statistics office, said consumer prices rose 2.7 percent in the year to June. That was unchanged on May's rate but slightly below the consensus in the markets of an uptick to 2.8 percent.
Despite the lower-than-expected outcome, the market still thinks the ECB will raise interest rates by a quarter percentage point for the second time since April at next week's policy meeting. That would take the benchmark rate up to 1.5 percent.
ECB President Jean-Claude Trichet reiterated that the bank's decision-making council is "in a state of strong vigilance" - a turn of phrase many analysts see as code for an imminent rate increase.
"We stand ready to act in a firm and timely manner to avoid that recent price developments give rise to broad-based inflationary pressure in the medium term," Trichet told a European Parliament committee in Brussels.
Inflation has been above the ECB's target of close to 2 percent since November, largely because of rising commodity and food costs.
In its first estimate, Eurostat, the EU's statistics office, said consumer prices rose 2.7 percent in the year to June. That was unchanged on May's rate but slightly below the consensus in the markets of an uptick to 2.8 percent.
Despite the lower-than-expected outcome, the market still thinks the ECB will raise interest rates by a quarter percentage point for the second time since April at next week's policy meeting. That would take the benchmark rate up to 1.5 percent.
ECB President Jean-Claude Trichet reiterated that the bank's decision-making council is "in a state of strong vigilance" - a turn of phrase many analysts see as code for an imminent rate increase.
"We stand ready to act in a firm and timely manner to avoid that recent price developments give rise to broad-based inflationary pressure in the medium term," Trichet told a European Parliament committee in Brussels.
Inflation has been above the ECB's target of close to 2 percent since November, largely because of rising commodity and food costs.
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