Increase in ECB Interest Rates

Might be March for the next hike :

Euro zone central bank sources told Reuters the European Central Bank would probably raise interest rates by a quarter percentage point in March, using its quarterly economic forecast as a catalyst for tightening.

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The article also shows a willingness to master the English language

"They are very cautious and they have to, as you say in English, 'cover their arses'

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http://today.reuters.com/business/newsarticle.aspx?type=tnBusinessNews&storyID=nL21531540&imageid=&cap=

Thanks Protocol.That explains the general EMU thinking. However the Celtic Tiger has been roaring for a decade now with practically full employment - enough to absorb the Irish who formerly emigrated plus new migrants from the rest of the EU and RoI (or at least, the main cities) has been 'expensive' for hitting a decade also. Is there a danger when the tide goes out RoI will be left beached given the cost of living has been climbing (but do-able, given the sea of cheap credit) when borrowing begins to cost more, farm subsidies disappear, demands for productivity kick in, pension benefits disappear and state taxes go up to cover the cost of the SIPPs payouts?

Anyone have a an ECB Dove/Hawk meter in terms of who is a haswk, nuetral, or a dove? Thanks

If you really wanted such a list and it hasn't been compiled already you could do a google search for each of the 18 members of the [broken link removed]and examine their recent statements.

But to be honest, I don't think it really matters for many of them.
Irish CB Governor, John Hurley, (incidentally, he praised the last rate hike) who is a member of the ECB Governing Council gave some insight into decision making when he used the phrase "forceful arguments".

So I would think what matters is who is making the most forceful arguments and where are they from ?

Right now the hawks are very concerned and, importantly, they are guided by the Germans (Weber and Issing) and also include Trichet.

The ECB stated mission is price stability as mentioned above. In order to achieve price stability the ECB has to target both inflationary and deflationary pressures in the Eurozone economy.

If you look at the yield currently available on 5, 10 and 30 year Eurobonds you will notice that the risk premium spread between current base rates and long dated bonds is small , very small. If you look at comparative yields on long dated debt in the US and UK you will see the same phenomena. The money markets are betting and betting heavily that inflation is mastered.

The Bank of England is likely to cut base rates next year in response to slowing consumer spending and rising unemployment, the American Federal Reserve has signalled that it’s rate tightening policy is reaching or has reached an end. The ECB may raise rates to 3% some time next year but the prospects of ECB rates reaching a level that will impact consumer spending to any degree is negligible.

But low inflation means low incomes growth or even falling incomes i.e. deflation.

This piece from the FT explains the present cloudy picture in the global economy

http://news.ft.com/cms/s/98ab01a4-6e30-11da-9544-0000779e2340.html