European Central Bank President Jean-Claude Trichet has sent a clear signal that interest rate rises are in the pipeline for next month.
Speaking in Dublin, he said strong vigilance was required with regard to inflationary risks in the Eurozone economy. The term 'strong vigilance' is seen by the financial markets as Mr Trichet's codeword for signalling an imminent rise in rates.
At each meeting before a rate increase, the ECB chief has always said that the bank would remain vigilant or strongly vigilant on inflationary risks.
A 0.25% interest rate hike is expected when the council meets in Frankfurt on 6 June.
Earlier, at the ECB's regular monthly policy-setting meeting at Dublin Castle, the bank held its key rate steady at 3.75% for the month of May.
Meanwhile, there has been no change in Ireland's inflation rate; it stayed at 5.1% last month which is the highest among countries using the euro.
