Euro-zone interest rates have further to rise, European Central Bank Governing Council member Axel Weber said today, although other policymakers stressed that no move is imminent given uncertainty over the credit crunch.
Weber's comments are the strongest sign yet the ECB may push ahead with higher interest rates once current market turbulence abates, after the central bank held off with a rate rise yesterday and left benchmark rates unchanged at 4%.
ECB President Jean-Claude Trichet said the ECB is constantly alert, underscoring the central bank's readiness to act once it has waited out the period of uncertainty generated by the sudden tightening of market liquidity.
Weber took Trichet's comments one step further. 'We said we are in a process of adjusting interest rates. I have said that this process is not over,' he told reporters on the sidelines of an ECB watchers conference.
'You can sum it up with the phrase: postponed is not abandoned', he said.
Economists generally expect the ECB to leave rates on hold again in October and a narrow majority expect it to raise rates to 4.25% by year's end.
Before the August credit crisis, many had seen rates hitting 4.5% by December.
