The European Central Bank is set to unveil its second rate rise since April on Thursday, but might then pause to assess the eurozone's economic prospects as Greece grapples with its debt crisis.
ECB president Jean-Claude Trichet repeated last week that the ECB governing council was 'in a state of strong vigilance' regarding inflation, a code phrase for a rate hike announcement.
'A 25bp (basis points) hike to 1.5 per cent therefore looks like a done deal,' said Capital Economics senior European economist Jennifer McKeown, a view shared by essentially all others.
The ECB wants to bring eurozone inflation that now stands at 2.7 per cent back towards its target of just below 2.0 per cent.
It will also consider the broader macro-economic picture, which includes unemployment that remained at 9.9 per cent for the third month in a row in May amid signs the 17-nation economy was cooling down.
The latest purchasing managers index published by the research group Market showed in addition a widening gap between core eurozone members and several on its periphery.
In London meanwhile, the Bank of England is expected to keep its main rate at a record low level of 0.50 per cent on Thursday.
Source : New Age
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