Euro pressured as ECB dampens rate hike prospect

The euro was on the defensive on Friday after European Central Bank President Jean-Claude Trichet poured cold water on expectations for a near-term rise in euro zone interest rates.

Trichet, speaking after the ECB's decision to keep rates at a record low 1 percent on Thursday, said inflation expectations remain "firmly anchored" and inflationary pressures over the medium to long term "should remain contained.

His comments disappointed investors who expected a more hawkish statement after recent inflation data came in above forecasts. Expectations the ECB would lift interest rates sooner than the Federal Reserve had boosted the euro in recent weeks.

The euro traded at $1.3625, after having fallen 1.2 percent the previous day, moving further away from a 12-week high of $1.3862 set on Wednesday.

Read Full Article from Reuters

- Posted: 2011-02-03 22:36:54

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