Jean-Claude Trichet – the President of the European Central Bank (ECB), said the key interest rate in the Eurozone could rise as early as next month.
The ECB President said that the bank was keeping an eye on the rising inflation and the rate setting committee of ECB may have to intervene because of latest ‘price shocks’ due to recent surge in commodity prices.
The latest development came to light after the ECB had announced that it is keeping interest rate steady at 1% after Thursday’s meeting.
“We are never precommitted. The decision will be taken at the next meeting by the governing council”, announced Mr. Trichet at the press conference.
The ECB may be forced to intervene to arrest the spread of ‘secondary effects’ across the Eurozone such as price and subsequent wage rise, said Mr. Trichet in an interview to BBC.
The current inflation rate of Eurozone has been recorded at 2.4 percent, more than 50 basis points higher than the targeted rate of less 2 percent. The ECB expects inflation to remain over 2 percent for the entire 2011, he said.
The possibility of a price rise remained “on the upside”, he said adding that the entire governing council was “prepared to act in a firm and timely manner”.
“The continued firm anchoring of inflation expectations is of the essence”, he concluded.