Go Finance Reporting in FRANKFURT - European Central Bank will keep its key interest rate at 1.25 percent this week, but further increase in signal is likely to occur because of rising prices in the euro zone of 17 countries.
Latest fears of debt default Greece that will haunt the ECB policy makers meeting in Finland, although the leader of the European Union (EU) is still rejected speculation in financial markets.
Economists expect the ECB council of government, who will gather in Helsinki next Thursday, suggesting further interest rate hikes, which will likely begin in June.
Quoted by AFP on Sunday (05/01/2011), the board of the ECB says it will defend and always be alert to price pressures, higher tariffs that are running.
Meanwhile, inflation kept rising slowly this damage the euro zone consumer confidence and lead to the ECB rate hike for the first time since July 2008.
According to EU estimates, inflation in April was recorded at 2.8 percent, well above the ECB target of just below 2.0 percent. This is because higher energy prices and other commodity prices seeping into the broader economy. While unemployment is still below 10 percent for two consecutive months.
As is known, most economists think Athens is still the need to restructure debt, perhaps by setting a longer time for replacement or by stating that not all will be replaced, although the leaders of the ECB and the European Union continued to insist otherwise.
Banks in France and Germany are very exposed to potential losses if the Greeks did not pay the debt, but politicians are also aware of people getting tired of footing the bailout bill.
In London, the Bank of England is expected to maintain its key interest rate at a low point of 0.50 percent due to weak economic outlook. While the U.S. Federal Reserve must remain with the record low near zero percent for now. (GoFinance)
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