ECB rate increase would be 'a major surprise', says analyst

The European Central Bank, still collecting economic data on the effect of its last interest rate increase, is set to hold steady today, but set the stage for a series of raises starting next month.

The meeting of the Governing Council comes amid faster economic expansion, higher oil prices and rising inflation rates.

Many analysts say the bank simply hasn’t had enough of that kind of data to make another move – yet.

Holger Schmieding, an analyst with Bank of America in London, said that in raising its key rate by a quarter of a percentage point to 2.75% in June, the ECB used the same language as with its previous increases in December and March.

“In both cases, the ECB waited three months until the next rate move,” said Schmieding. “For this reason, a back-to-back increase in rates in July would be a major surprise, and would likely trigger a barrage of criticism about a lack of ECB transparency.”