ECB to raise euro-zone rates to 3.5% say economists
The European Central Bank (ECB) will raise interest rates to 3.5 per cent this week, economists surveyed by Bloomberg have unanimously predicted.
The euro was worth $1.3312 in early Monday trading, up from $1.3367 overnight and the pound traded at $1.9816 and 67.31p on the euro. The dollar was worth $115.17.
If proved right the ECB move would be the sixth rate rise in the past year and would probably lay the ground for rates of 3.75 in the first quarter of 2007, said economists.
"The ECB is seriously considering higher rates next year, as from their point of view rates even at 3.5 per cent are still accommodative," said David Owen of Dresnder Kleinwort.
"The forecasts are key to the outlook." A rise would take euro-zone interest rates to their highest point since 2001 and has been supported by key finance ministers.
The 41 economists surveyed for the poll said that rates of inflation would fall to 1.9 per cent by 2008, remaining close to the ECB's 2.0 per cent target rate.