In his strongest words to date on the threat of surging inflation, ECB president Jean-Claude Trichet warned of “evidence of short-term upward pressure on overall inflation”. He added: “We are permanently alert. We are never-pre-committed not to move interest rates.”
Trichet emphasised that the ECB raised rates at the height of the financial crisis in July 2008, in a bid to stress that the central bank was prepared to raise rates even in uncertain times.
Trichet’s comments come amid ongoing concerns that without ultra-low interest rates, Portugal, Spain, Italy and Belgium could be forced to join Ireland and Greece in needing an EU bailout.