Euro steady ahead of expected ECB rate hike
LONDON (AFX) - The euro was steady as the markets focused on today's expected interest rate hike from the European Central Bank and the ensuing press conference with its president Jean-Claude Trichet. A quarter point rate hike, the ECB's first in over five years, is all but guaranteed, but there is real uncertainty as to what will happen next. Trichet will be unveiling the central bank's new growth and inflation forecasts, which should justify today's decision to raise the key refi rate to 2.25 pct. It has been held at 2.00 pct since June 2003. There are some market predictions that the new forecasts will show core inflation moving about the 2 pct upper limit by 2007. 'Whilst the ECB will be able to use the new forecasts to justify raising rates today, the predictions suggest that the central bank should be doing more than 'moderately augmenting' interest rates over coming months,' said Mitul Kotecha, global head of currency research at CALYON.
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