European Central Bank Signals More Rate Hikes
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The European Central Bank left little doubt Thursday that it planned to raise interest rates for a fifth time in October, after it released upbeat growth forecasts and gloomier inflation prospects.
The central bank held its key rate at 3% at its monthly rate-setting meeting as widely expected, but afterward prepared the ground for a hike by employing the phrase “strong vigilance” against mounting price dangers.
“Strong vigilance remains of the essence so as to ensure upside risks to price stability are contained,” bank President Jean-Claude Trichet told a news conference.
By repeating the phrase several times, Trichet signaled to markets that they should brace for tighter credit at the bank’s next meeting Oct. 5. The word “vigilance” has preceded rate hikes four times, in December, March, June and Aug. 3.
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