The central bank for Europe has voted to leave monetary policy unchanged despite high inflation, although the bank’s president has signaled that an increase could be in the works, according to Bloomberg. On Thursday, the European Central Bank announced that it would leave monetary policy unchanged in June. However, he ECB President, Jean-Claude Trichet said that the latest data have shown “continued upward pressure on inflation,” adding, “Accordingly, strong vigilance is warranted,” which has been widely read as a signal for tightening at the policy board’s July meeting.
Trichet denied that his statement was a signal, asserting that officials were “not pre-committed” to an schedule, and he continued to say, “We decide on interest rates when we judge it is necessary to deliver price stability.” The ECB also raised its forecast for both growth and inflation in the region during 2011. The inflation forecast was lifted to 2.6% from 2.3% previously, while growth in the eurozone is expected to reach 1.9% in 2011, rather than the 1.7% that had been previously forecast. Inflation has remained above the bank’s 2% target since December, and Trichet acknowledged, “Risks to the medium-term outlook for price developments remain on the upside.”