The European Central Bank, the body which sets interest rates for the eurozone, has said that interest rates may need to rise in April, suggested as a means of clamping down on inflation as a proactive preventative measure.
The European Central Bank has given its strongest indication to date that interest rates for the eurozone may rise in April, as a means of guarding against the risk of inflation creeping in to the European economy.
ECB President Jean-Claude Trichet said that a rise in interest rates was ‘possible’, and said the ECB was exercising ‘strong vigilance’ to the threat of inflation, following a decision to hold interest rates at 1% last week.
While Mr Trichet suggested that no firm course of action had been decided, the news has been seen as a strong predictor of an interest rate rise in April, which could strengthen the euro while pushing up the cost of borrowing across the eurozone.
Eurozone inflation is currently sitting at 2.4%, some 0.4% above the ECB’s target rate of 2%, which the ECB anticipates will remain stubborn throughout the remainder of the year before falling back within target levels in 2012.