Trichet Heading for ‘Hefty’ Rate Increase Cycle, Investors Say - Bloomberg

European Central Bank President Jean-Claude Trichet says he isn’t embarking on a series of interest-rate increases. Investors don’t believe him.

ECB policy makers meeting in Frankfurt today will raise the benchmark interest rate to 1.25 percent from a record low of 1 percent, according to all 57 economists in a Bloomberg News survey. When Trichet flagged the move on March 3, he said it’s “certainly not the start of a series.” Investors are nevertheless betting on two more increases to 1.75 percent by the end of the year, Eonia forward contracts show.

For more: Trichet Heading for ‘Hefty’ Rate Increase Cycle, Investors Say - Bloomberg

European Central Bank Appears Resolute on Likely Rate Hike - by JACK EWING

This month, the European Central Bank all but promised a rate increase when its governing council meets on April 7. There is no sign, however, that the earthquake in Japan and its aftermath have dissuaded policy makers from their view that rates must rise to pre-empt inflation.

Economists say that the direct economic effects of Japan’s disaster on Europe are not huge. But they warn that the prospect of a nuclear crisis, along with continued fighting in Libya and high fuel prices, could further unsettle consumers. 

For more: European Central Bank Appears Resolute on Likely Rate Hike - NYTimes.com