By Chris Jones - 31st July 2006
Eurozone interest rates are expected to rise to three per cent this week amid continued concerns about the rising cost of oil.
European central bank president Jean Claude Trichet has repeatedly stressed that the full impact of oil price inflation has yet to filter through to the eurozone economy, and that further rate rises could be necessary.
Increased consumer spending in France and Italy – fuelled by both countries’ recent success in the World Cup – has also sparked rumours of a rate rise as the bank tries to keep inflation in check.
The likelihood of a rate rise has also grown following the ECB’s decision to hold a face-to-face meeting of the monetary policy committee on Thursday.
Traditionally, the bank’s August meeting is a low key affair, generally conducted via telephone.
Most analysts predict that Thursday’s 0.25 per cent rate rise is unlikely to be last, with rates seen as reaching as much as 3.5 per cent by the end of the year.
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