Risk of ECB to increase interest rates rises over inflation concerns

THE risk of the European Central Bank increasing interest rates before the year end has risen to about one-in-four as the bank paints itself into a corner over its concerns about rising inflation.

A leading economist believes there is no case for a hike in rates in the short term to inflation which is at 2.6% in Europe.

This revised estimate published yesterday is 0.1% higher than the initial forecast, but does not warrant panic over the inflation rate, he said. Higher oil prices are the main reason and in time that oil price pressure on the cost of living will recede.