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ECB leaves key interest rate intact, signaling increase ahead |
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08:15, July 06, 2007 |
The European Central Bank (ECB) left its benchmark refinancing rate unchanged at a six-year high of 4 percent on Thursday as previously expected, but the bank chief hinted at the possibility of raising it further in months ahead.
"Given the positive economic environment in the euro, our monetary policy is still on the accommodative side, with overall financing conditions favorable," ECB President Jean-Claude Trichet told reporters after the bank's 19-member rate-setting council meeting in Frankfurt.
"Given the continued vigor of money- and credit-expansion, there are clear risks to price stability," Trichet said. "Looking ahead, acting in a firm and timely manner to ensure price stability in the medium term remains warranted."
Amid a continuing economic boom in the euro zone, the ECB has increased rates eight times since December 2005 with the latest increase occurred on June 6.
Analysts now expect the ECB to raise the benchmark rate to 4.25 percent in September.
According to Trichet, the euro-zone inflation rate for June was 1.9 percent, unchanged from previous months. But he warned that annual inflation rates are likely to fall only slightly in the months ahead before rising again "significantly" towards the end of the year.
Source: Xinhua
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