Frankfurt (Reuters) - the European Central Bank held interest rates Thursday and is expected to report a rise in July to address the price pressures in the euro area, where he is pressed to help pave the way for a new plan to rescue the Greece.
The ECB maintained its main rate of 1.25% refinancing, but should use forecasts of higher personal inflation, to be published in the press conference of post-policy meeting as justification a rate hike to come - probably beginning by an increase of 25 basis to 1.50% points next month.
The following press conference, President of the ECB, Jean-Claude Trichet should say that the Bank will exercise "strong vigilance" on the pressures on prices, using an expression which, in the past, reported that a rising was a month.
He used this code in March to mark rate in April increased to 1.25% 1.0% - the ECB from tightening first in two years.
"Today would have been too early for the ECB to raise rates," said Berenberg Economist Holger Schmieding. "It would have been too early after the April rate hike, he would have reported a very aggressive ECB rate position."
"We expect the ECB to report an increase in the rate of July, but leave the prospects of rate policy later deliberately open in order to not step to trigger an increase are important in the euro or spook markets in any other way", he said.
74 Economists surveyed by Reuters had expected the ECB to leave rates unchanged at 1.25%. Earlier Thursday, the Bank of England has kept interest rates unchanged at a record low of 0.5%.
Firming - cost pressures the euro-zone producer prices increased by more than expected in April and overall inflation was 2.7 per cent, well above target of 2.0% of the ECB of ceiling - mean that it is probably noted an increase in rates in July.
ECB projections are likely to be raised, both inflation and economic growth. In the last set of forecasts published in March, the ECB provides that inflation of approximately 2.3% this year and 1.7% then.
GERMAN INITIATIVE
The ECB is mired in high stakes manoeuvres between financial markets, euro area Governments and the Monetary Fund International in the thread who pays avoid the Greece becomes the insolvency State euro zone first.
Pushing the Germany for the participation of the private sector.
In a letter of 6 June at the head of the ECB, the IMF and its counterparts in the euro, German Finance Minister Wolfgang Sch?uble has required a "quantified and substantial" contribution of bondholders in any Greek new package.
The ECB has not yet been explicit, public response to this proposal, but Trichet said that he would be ready to accept a system in which financial institutions in Europe have been invited to maintain their level of outstanding credit to the Greece.
The ECB has always opposes a cut in the capital of the debt, which would mean by default and would affect the Central Bank hard because he purchased approximately 45 billion euros (66 billion dollars) of the obligations of the Greek Government since year latest to try to calm markets.
The ECB also as the Greece wants to meet its commitments to improve its financial situation and other euro-zone Governments help with assistance and has resisted pressure to help Athens by reactivating its now dormant binding-purchase program.
However, the Central Bank is warming to the idea that private investors to share the burden of saving the Greece, potentially paving the way for an exchange of debt.
Trichet as ECB President whose term expires at the end of October, will be pressed for a more detailed response to the letter of the Sch?uble to his following press conference.
"The pressure for the participation of the private sector seems now so intense that it cannot be fought," J.P. Morgan Greg Fuzesi Economist wrote in a research note.
FUNDING ASSISTANCE
While we expect an increase rate of July of the flag, the ECB will be care of ne pas withdraw support to the economy and the banking system so fast to stall recovery or jeopardize the ability of banks to address the limited liquidity.
Fears that the crisis of la debt could spread on the banking system and the fact that in the States of la salvaged off euro-zone banks remain excluded from the credit market, will likely stop the ECB reintroduce liquidity auctions.
The ECB began distributing of unlimited cash in all operations of liquidity in October 2008, after the collapse of the Investment Bank Lehman Brothers has intensified the disruption of financial markets.
Since then, he has abandoned many of six and twelve month liquidity operations and returned to auction offers for three months last year. However, he returned to full allotment for these operations quickly after the Greek crisis has intensified.
Member of the Executive Board that Lorenzo Bini Smaghi said last week that the Central Bank may not be ready to announce its plans this week, suggesting that it may make a decision of last minute at its meeting on 7 July. The ECB is committed to maintaining tenders on an unlimited basis of funding until at least July 12.
(Edited by Ruth Pitchford, Mike Peacock)
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