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ECB leaves rates at 3.25%
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March 2, 2000: 11:22 a.m. ET
Central bank hints at future interest-rate rise to head off inflation
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LONDON (CNNfn) - The European Central Bank left its key interest rate unchanged at 3.25 percent Thursday, sending the euro lower, but offered a strong hint that it will raise rates at the end of the month.
The decision to hold the refinancing rate steady had been expected by most economists, though a host of contradictory comments by ECB council members in recent days had prepared markets for a possible hike. The euro was 0.5 cents lower at $0.9675 following the announcement.
The bank raised its borrowing rate by a quarter percentage point on Feb. 3 in a move widely criticized as indecisive, following a half-point rise in November and a half-point cut last March. Observers, including the influential Organization for Economic Co-operation and Development, have attacked the bank's rate-setting policy as opaque compared with, for example, that of the U.S. Federal Reserve.
However, ECB president Wim Duisenberg appeared to be making efforts to prepare markets for a rise.
"It seems in a way that [Duisenberg] would have liked to hike already, but that he couldn't find a consensus in the council," Marco Kramer, an economist at Paribas, told Reuters. "He had very strong points that rates can only go in one direction. He cannot be clearer on that. Our view is that the Bank will move on March 30."
The ECB council is due to meet twice before the end of the month, but the last meeting is the only one with a scheduled press conference, a factor in the Bank's three rate moves since its creation.
The euro has struggled below parity with the dollar for six weeks. The ECB has no mandate to bolster the value of the currency except in so far as its weakness imports inflation into the 11-nation euro-zone. Recent price data have shown an uptick in inflation, with consumer price inflation in the euro-zone rising to the bank's 2 percent ceiling in January as higher oil prices pushed up energy costs.
Duisenberg said at Thursday's news conference that current wage deals in the euro-zone "do not give rise to concern" that inflation will get out of control. 
-- from staff and wire reports
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European Central Bank
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