Tuesday, March 8, 2011

Europe To Raise Interest Rates 3 Times This Year; Inflationary Pressures

The banks' party may be coming to an end. The easy money policy of the last couple of years was doomed to cause inflation. The ECB said today that it may raise interest rate, not once, but perhaps 3 times this year.

Bloomberg reported earlier today that the statements were made by Axel Weber, European Central Bank council member, when he said that "the bank has embarked on a normalization of interest rates and he doesn’t want to correct market expectations for as many as three quarter-point increases this year".

Weber: “I wouldn’t do anything here to try to correct market expectations at this point,” “I see no reason at this stage to signal any dissent with how markets priced future policies,” he said.

Inflation in Europe

Weber was also reported saying that  the ECB’s latest inflation forecasts may underestimate price pressures.

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