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Eurozone rates held steady by ECB Eurozone rates held steady by ECB
(4 days later)
The European Central Bank (ECB) has voted to keep eurozone interest rates on hold at 3.25% for November, a decision that was widely expected.The European Central Bank (ECB) has voted to keep eurozone interest rates on hold at 3.25% for November, a decision that was widely expected.
Analysts now expect the ECB will raise rates by one quarter of a percentage point in December, as it continues to keep a close eye on inflation.Analysts now expect the ECB will raise rates by one quarter of a percentage point in December, as it continues to keep a close eye on inflation.
Although eurozone inflation fell in October to 1.6%, the ECB has hinted further rate rises are needed.Although eurozone inflation fell in October to 1.6%, the ECB has hinted further rate rises are needed.
ECB boss Jean-Claude Trichet said "strong vigilance" remained vital.ECB boss Jean-Claude Trichet said "strong vigilance" remained vital.
'Anchoring inflation''Anchoring inflation'
"Acting in a firm and timely manner to contain risks to price stability remains essential to ensure that inflation expectations are kept solidly anchored," he said."Acting in a firm and timely manner to contain risks to price stability remains essential to ensure that inflation expectations are kept solidly anchored," he said.
Despite last month's inflation fall, the ECB is concerned that lower oil costs could refuel upward price pressures.Despite last month's inflation fall, the ECB is concerned that lower oil costs could refuel upward price pressures.
It also sees soaring German and French business and consumer confidence as a further inflationary risk.It also sees soaring German and French business and consumer confidence as a further inflationary risk.
The ECB which last raised rates last month - by one-quarter of a percentage point - has set an inflation target of 2% or below.The ECB which last raised rates last month - by one-quarter of a percentage point - has set an inflation target of 2% or below.
December's expected one-quarter of a percentage point rise to 3.5% would be the sixth increase in eurozone rates during 2006.December's expected one-quarter of a percentage point rise to 3.5% would be the sixth increase in eurozone rates during 2006.
UBS economist Stephane Deo said he expected the ECB to increase rates not just in December, but into the New Year.UBS economist Stephane Deo said he expected the ECB to increase rates not just in December, but into the New Year.