Rate hikes, weaker euro on way, experts warn

EUROPE is facing higher interest rates and a weaker euro as US inflationary pressures pave the way for US interest rate hikes, economists warned last night.

The dollar bounced to five-week highs yesterday morning when news of higher than expected price inflation panicked the US Federal Reserve. It said that inflation had now become an issue for the world’s largest economy.

That was seen as a signal for further interest rate rises in the months ahead and the dollar rose sharply on the back of the Fed’s comments.