Warning of ECB higher interest rates

BORROWERS were warned to prepare for higher interest rates yesterday despite the ECB’s decision to leave rates unchanged.

ECB president Jean-Claude Trichet said the bank had cut its growth forecasts for the eurozone for the year ahead but also dropped hints that a series of rate hikes was on the way later this year. He said eurozone growth would be in the region of 1.6%, down from pervious forecasts of 1.9%.

IIB Bank economist Austin Hughes said the weaker growth forecasts had been widely expected, but Mr Trichet focused on inflationary risks in his monthly press conference.