On Tuesday the Euribor, euro-priced bank-to-bank lending rates, rose in the wake of renewed warnings from the European Central Bank (ECB) that an interest rate hike is in the wings for April.
Reuters reported that Jean-Claude Trichet, president of the ECB, said on Monday that he had nothing to add to statements earlier in the month that an April rate increase was a possibility. Markets reacted with shock to those statements, since they had not expected rates to rise until considerably later in the year. There had been no departure this month from the record low 1% interest rate, which the ECB left unchanged.
A similar tone was struck by both Mario Draghi, head of the Bank of Italy, and Gertrude Tumpel-Gugerell, who is a member of the Executive Board. Tumpel-Gugerell added that the ECB is in “strong vigilance” mode, a phrase that previously has been employed to point toward a coming interest rate increase.