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Last Updated: Thursday, 2 February 2006, 14:13 GMT
ECB to be 'vigilant' on inflation
ECB president Jean-Claude Trichet
Investors have to try to read Mr Trichet's thoughts
The European Central Bank (ECB) has said it will remain "vigilant" about growing inflationary pressures after opting to keep interest rates at 2.25%.

President Jean-Claude Trichet said economic activity in the eurozone was improving and the ECB must ensure this growth does not affect price stability.

Many commentators believe the ECB could raise interest rates in March.

The ECB is concerned that the eurozone's gradual economic recovery could stoke inflation.

Oil price threat

The ECB raised rates by a quarter of a percentage point in December, the first rise in five years.

Prior to that decision, Mr Trichet referred to the need for "strong vigilance" over the risks to price stability.

He reiterated this concern on Thursday, saying persistently high oil prices still posed the most significant threat.

The eurozone's economic outlook for 2006 is mixed, but some of its largest economies, including France and Germany, are expected to gain momentum.

The ECB is forecasting economic growth of 1.9% across the 12-member eurozone bloc compared with 1.4% last year.



SEE ALSO:
UK interest rates unchanged again
12 Jan 06 |  Business
OECD warns on eurozone rate rise
29 Nov 05 |  Business
Q&A: ECB interest rate rise
01 Dec 05 |  Business
ECB ignores fears to raise rates
01 Dec 05 |  Business


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