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2/3/06

FinFacts: Trichet uses word "vigilance" 3 times on risks to price stability; Increasing liklihood of an interest rate rise in March

FinFacts

Trichet uses word "vigilance" 3 times on risks to price stability; Increasing liklihood of an interest rate rise in March

In Frankfurt today ECB President Jean-Claude Trichet said that the ECB "will exercise vigilance so as to ensure the solid anchoring of long-term inflation expectations at levels in line with price stability. Such vigilance is also warranted, given the historically low levels of both nominal and real interest rates across the whole maturity spectrum and the overall accommodative stance of monetary policy."

Trichet said that over the short term, annual inflation rates may again increase somewhat, reflecting in particular renewed increases in energy prices and some base effects. Looking further ahead, indirect effects of past oil price rises on other components of the price index may gradually materialise, and already announced changes to administered prices and indirect taxes can be expected to have an upward impact on HICP inflation.

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