The European Central Bank is unanimously expected to hold its key interest rates steady this week, just a month after raising them to a five-and-a-half-year high in June, analysts said on Wednesday.
Nevertheless, the bank, dubbed the guardian of the euro, is likely to begin to prime the financial markets for a further rise in borrowing costs in September, ECB watchers predicted. In a poll of 31 economists by AFP and Thomson Financial News, all analysts forecast no rate change at the ECB's monthly policy-setting meeting on Thursday.
The bank has tightened monetary conditions eight times in the past 18 months, each time by a quarter of a percentage point, to prevent any overheating of the economy as it currently enjoys a robust upturn.
The last move, which brought the ECB's benchmark "refi" refinancing rate to 4.0 percent, was in June. And since ECB has never previously raised rates at two consecutive meetings and there is no urgency for it raise rates again this week, economists predicted that the bank would hold the refi rate steady at 4.0 percent. But at the regular news conference held after the meeting, market players will be listening out for any comments from ECB chief Jean-Claude Trichet that could signal additional monetary tightening in the months ahead, analysts said.
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