ECB Expected to Add Further Rate Hikes

A survey of economists shows most observers believe the European Central Bank will implement further interest rate hikes in addition to yesterday’s quarter-point increase to 1.25 percent. The survey also indicates that the ECB is expected to increase rates every quarter through 2012 to bring the benchmark rate to 2.75 percent by the end of next year.

“Trichet may have said that they haven’t made that decision, but he always says that,” said Nick Kounis, chief European economist at ABN Amro Bank NV in Amsterdam, who expects the next move in July. “They will continue to raise rates and it’s just a combination of factors that will drive it — the inflation outlook, the economic outlook and their desire to normalize policy.”

Source: Bloomberg