European Market in the Hands of ECB?

The Europe’s inflation slowed down to 2.3 percent from 2.4 percent. The European Central Bank raised its forecast for inflation to 2.4 percent for the next year. The ECB is sending signals to the market that the hike in interest rates is quite likely.

The ECB may increase the interest rates to cool the inflation. ECB fears that the impact of inflation may also affect the oil prices in 2007.

I feel that the current economic conditions in the US may slow the European imports and the ECB’s policies will be crucial in the coming years.