Interest rates in the Eurozone were kept on hold at 3.5 percent on Thursday, but many analysts look for another rate increase at the European Central Bank’s next meeting, scheduled for March. In comments after the meeting of the ECB, the Bank’s president said that “vigilance” must be used in monitoring the economy, a word he often uses in statements a month ahead of rate increases. Last month, he used instead the phrase “close monitoring”. This use of language by the ECB president is closely watched by analysts looking for clues about where the interest rate is likely to go next.

With unemployment down in Germany and France and with consumer confidence still robust after an increase in the value added tax in Germany, from 16 percent to 19 percent, many analysts predict strong growth in the economy during the first half of 2007. Along with that growth comes the possibility that inflation will also grow.

The decision by the ECB came after the Bank of England also voted to keep the UK interest rate steady at 5.25 percent after it had raised it last month. Many analysts look for another near-term rate hike there, as well.

Tags: Interest Rates News //