FRANKFURT: The European Central Bank kept its main interest rate at a record low of 1.0 percent Thursday, but financial markets anticipated tough talk on inflation from ECB president Jean-Claude Trichet. The focus when Trichet speaks to media shortly after the rate decision will be on updated forecasts by central bank staff for 2012 inflation. Economists say the inflation forecast, set against the ECB target of just below 2.0 percent, will give a good indication as to when the bank's key lending rate could begin to rise from the record low in place since May 2009. "The crucial 2012 inflation call will probably keep pointing to price stability" of around 1.7 percent inflation, UniCredit economists wrote, which would suggest ECB policymakers might hold fire for a while longer. But Trichet "will probably use tougher wording in the press statement" to keep inflation expectations in check, Citi economist Juergen Michels added. With inflation now at 2.4 percent, stronger economic prospects and Arab unrest driving energy prices higher, ECB governors might have to rethink their outlook that inflation will calm down early next year, he said. – Agence France
