ECB officials have continued to take a tough stance on monetary policy over the past 24 hours. Belgian central bank governor Quaden stated that the ECB could increase rates again as early as the first week of August teleconference rather than at the regular council meeting later in the month.
European Central Bank governing council member Nicholas Garganas was quoted on Tuesday as saying that the bank was ready to increase rates aggressively to counter inflationary risks and also warned that the ECB would not necessarily stick with 0.25% rate increases. The Euro-zone money supply and lending data will be watched closely on Thursday and another strong set of data would reinforce ECB concerns over inflationary pressure.
Meanwhile, the German IFO index was also stronger than expected with a rise to 106.8 in June from 105.7 in May and the resilience in the face of higher interest rates and energy costs will boost confidence that the Euro-zone economy can cope with further monetary tightening.
There will be increased market speculation that Euro rates could be increased as early as July and there will also be speculation over a 0.5% increase which will offer background support to the Euro.
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