Trichet testified to the EU Parliament
European Central Bank President Trichet testified to the EU Parliament that the central bank’s “timely” interest rate increases are anchoring inflation expectations and reiterated that “monetary policy in the euro area remains accommodative.” With inflation at 2.5%, well over the ECB’s preferred 2.0% ceiling, the cusp of further rate hikes is not at question. The main uncertainty is whether the ECB will raise rates before September, which would be a departure from its quarter per quarter tightening pattern.