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Last Updated: Thursday, 2 March 2006, 06:50 GMT
Eurozone rates 'set for increase'
ECB president Jean-Claude Trichet
Mr Trichet has said the bank will be "vigilant" on inflation
The European Central Bank (ECB) looks set to raise interest rates in the light of rising inflationary pressures in the eurozone.

Economists are betting on a quarter percentage point rise in the cost of borrowing to 2.50% on Thursday.

"An ECB rate increase looks like a safe bet," said economist John Shepperd at Dresdner Kleinwort Wasserstein.

The last time the ECB raised interest rates was in December last year, when they rose from 2% to 2.25%.

Inflation threat

Last month, ECB President Jean-Claude Trichet said the bank would remain "vigilant" about growing inflationary pressures.

He said economic activity in the eurozone was improving and the ECB had to ensure this growth did not affect price stability.

Persistently high oil prices have 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.

In its last forecast, the ECB predicted economic growth of 1.9% across the 12-member eurozone bloc compared with 1.4% last year.

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