Banks ponder rates as growth quickens
FRANKFURT Declines in the euro and the price of oil, which have driven up profits at companies like the carmaker Porsche, are expected to have kept German business confidence near a five-year high this month, economists say. The Ifo confidence index should reach 101.4, compared with 102 in January, according to the median forecast from 37 economists surveyed by Bloomberg News. The institute, based in Munich, will publish the index, based on a monthly survey of 7,000 executives, on Thursday. Separate surveys show that French and Italian executives have also grown more optimistic. "The Ifo index should stay around the current high level," said Sylvain Broyer, an economist at Ixis CIB in Frankfurt. "The euro has fallen, which is good for exports, and with a pickup in investment, we should see more employment. The ECB will certainly hike rates by a quarter point in March." With more money for investment, companies are spending more on machinery, which could accelerate hiring. Signs of quickening growth will give the European Central Bank room to raise interest rates next month. The ECB president, Jean-Claude Trichet, has called such expectations "reasonable." He is scheduled to speak Monday to the European Parliament. Analysts said the U.S. Federal Reserve was feeling similar pressures. They predicted that consumer prices rose last month, while a gauge of future economic activity will signal vigorous growth ahead. A German investor-confidence indicator held near a two-year high in February, and the DAX stock index has risen 6 percent this year.
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