ECB 10 January Council Preview
NO RATE MOVE EXPECTED 10 JANUARY: ECB's WAIT-AND-SEE STANCE, WITH TIGHTENING BIAS, SET TO CONTINUE THROUGH TO MARCH OR JUNE 2008.
· Heightened inflation risks but financial fragility and uncertainties about GDP growth prospects point to ECB again keeping rates on hold, with tightening bias.
· Fears that current high inflation rate, with tightening labour markets, co induced second-round effects in this year's wage rounds.
· If financial turbulence subsides, ECB could look to March for opportunity to raise 'refit' rate to 4 1/4%, but EZA also sees June a possibility.
© Graham Bishop
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