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ECB president warns Eurozone rates could rise by April

The president of the European Central Bank has said that interest rates could rise in the Eurozone as early as next month.

Jean-Claude Trichet said the ECB was taking a position of caution against rising inflation, but said the rate setting committee may have to act due to recent “price shocks” because of the sharp rises in commodity prices.

The news came as the ECB announced it would keep interest rates at 1 per cent at yesterday’s meeting.

Speaking at press conference, Trichet said: “We are never precommitted. The decision will be taken at the next meeting by the governing council.”

According to the BBC, Trichet said the ECB may be forced to act to prevent “secondary effects” from the current inflation concerns spreading across the eurozone, such as wage and price rises.

Inflation in the Eurozone currently stands at 2.4 per cent, above the ECB’s target of just under 2 per cent. The ECB has said it expects the rate to stay above 2 per cent for most of 2011.

Trichet said that the risk to prices were “on the upside” and the whole governing council was “prepared to act in a firm and timely manner”.

“The continued firm anchoring of inflation expectations is of the essence,” he said.

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  1. The prospect of widespread civic unrest due to the escalating prices of fuel and food, will only be accelerated if interest rises add to the range of factors sharply reducing the standard of living so many of us are accustomed to, the French refuse to retire later and rioted over a retirement age of 62, a rise in interest rates will fuel wage demands with an even greater inflationary result, do they read the news about the Middle East?

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