Annual inflation in the eurozone hit a record high of 4% in June heightening expectations that the European Central Bank (ECB) will increase its monetary policy rate, currently at the same level, 4%. This is the highest value reached since its introduction of the consumer price index in 1997 that measures eurozone inflation. Price growth in the eurozone sped up from 3.7% in May reaching double the level of the ECB target of 2%, due to the continuous increase in energy and food prices. Analysts expect the ECB to increase its main interest rate to 4.25% in Thursday's session, a measure often discussed by the bank's president, Jean-Claude Trichet (photo) and other bank officials since the ECB's last session in May. By raising the interest rate, a step that will also be felt on the Romanian market, the ECB is trying to limit the negative impact of the rapid increase in the energy and food prices on the economy, trying to prevent the creation of an inflationary spiral. Yesterday, oil traded close to the 143-dollar/barrel-peak reached last week, amid tensions in the Persian Gulf and the depreciation of the American dollar. However, the interest rate increase is regarded with scepticism by European politicians, with Spain's PM Jos? Luis Rodriguez Zapatero and Germany's Finance Minister Peer Steinbrueck advising ECB officials to consider economic growth as well, not just price growth, given that the eurozone's economic growth is showing clear signs of a slowdown.
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