ECB Weber Sees "Normalization" Of Interest Rates-Report
("ECB Weber Sees "Normalization" Of Interest Rates - Report," at 1545 GMT, misstated implicit market expectations for the ECB's refinancing rate at year-end in the penultimate paragraph. The correct version follows:)
LONDON (Dow Jones)--The European Central Bank will probably need to raise official interest rates more than once to eradicate the risk of inflation, Deutsche Bundesbank President Axel Weber said in a television interview broadcast Tuesday.
"Hitherto, it has seldom been the case that the risks of inflation were banished completely with one small interest rate step," Weber, a member of the ECB's governing council, told Deutsches Anleger-Fernsehen. "There will be a normalization of interest rates."
ECB President Jean-Claude Trichet had explicitly stated last week that his comment that an increase in the ECB's main refinancing rate from 1% is "possible" already next month shouldn't be taken as signalling the start of a new cycle of rate rises.
Weber was just as explicit in contradicting Trichet Tuesday, referring directly to Trichet's statement and disagreeing with it.
Weber, who is stepping down from the Bundesbank at the end of April, pointed out that the forward curve for euro interest rate futures implies that the market expects the refinancing rate to be at 1.75% by the end of the year.
"I think this is relatively appropriate," Weber said.
TV station website: www.daf.fm
March 08, 2011 11:03 ET (16:03 GMT)