ECB's Trichet signals rate hike in July

The European Central Bank is set to raise interest rates next month in an attempt to dampen persistent inflation.

Speaking in Frankfurt today, Trichet said "strong vigilance" is required against "continued upward pressure on inflation", which is likely to translate into an interest hike in July. The bank agreed to keep rates at 1.25% for the current month but will seek to take a more aggressive stance if the oil-driven inflation feeds into wage demands, Bloomberg reports. "Risks to the medium-term outlook for price developments remain on the upside," Trichet said. "It is of paramount importance the rise in inflation does not translate into second-round effects in price and wage-setting behavio...