Fears of interest rate hike remain

THE ECB’s intention not to raise interest rates in June from the present 1.25% rate may be just a temporary respite.

The bank raised its key rate by 0.25% last month having held rates at record lows of 1% for nearly two years as the eurozone economy stalled.

ECB president Jean-Claude Trichet, speaking to the media in Helsinki after the rates were left unchanged yesterday, warned that the bank stands ready to raise rates if inflation continues to pose a serious threat to the stability of the region.