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6/29/06

Business Day - Pundits see rate hike in Europe likely in August - Natalie Harrison

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Pundits see rate hike in Europe likely in August - Natalie Harrison

LONDON — There is now a one in three chance the European Central Bank (ECB) will raise interest rates as early as August 3 after hawkish rhetoric by some policy makers and signs of mounting inflation pressures, a Reuters poll shows. All 61 economists surveyed this week expected that the ECB would leave its benchmark refi rate unchanged at its next meeting on July 6 following a quarter-point rise to 2,75% earlier this month.

But tough talk from several ECB policy makers over the past few days has boosted market expectations that the central bank may raise rates as early as August 3.

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