The European Central Bank is likely to ramp up anti-inflation rhetoric when its governing council meets in Frankfurt tomorrow, but refrain from any concrete steps owing to mixed signals on where the euro zone economy is headed.
The main ECB interest rate will probably emerge from the meeting unchanged at 1%, a level it fell to in May 2009, economists say.
Major central banks have maintained ultra-low lending rates to keep credit flowing to the wider economy but now face sharp climbs in inflation that could force a rethink in the coming months.
Euro zone inflation shot up to 2.4% in January, the European Union said earlier this week, an event anticipated by ECB policymakers who feel price rises will moderate towards the end of 2011. Their inflation target is just below 2%.
In Britain, where the Bank of England has held its main rate at a record low of 0.5%, Governor Mervyn King has warned annual inflation could reach between 4-5% in the coming months.
Higher energy and food prices are now the main drivers of inflation, but higher taxes approved by governments to reduce debt are another factor pushing up costs for businesses and households.
The worry for ECB governors is that inflation expectations will start to rise as well and decisions on pricing, wage demands and spending will be made accordingly.
Both ECB president Jean-Claude Trichet and executive board member Lorenzo Bini Smaghi have warned that imported price increases cannot be discounted when mulling the appropriate level of interest rates.
