The ECB is likely to raise interest rates in a regular monthly policy meeting scheduled on Thursday. The key rate that is now at a historic low of 2% will probably be raised to combat inflationary pressures.

 

Many ECB critics claim that the rate hike will bring the dollar up once again, curbing European exports and negatively impacting weak economic recovery in the eurozone.

 

Rodrigo Rato, the managing director of the International Monetary Fund, opposed Thursday the rate rise until "a self-sustaining upturn in domestic demand is evident." The unemployment in some areas of the eurozone is at about 9%, and the continuation of the euro rise that ECB President Jean-Claude Trichet named “unwelcome” and “brutal” will only exacerbate the situation.

 

Still, the ECB sees inflation control as its primary goal, and Mr. Trichet recently announced declared he sees inflation as "worrisome" and that the "upside risks" to inflation are "augmenting."

 

The ECB has been sending mixed messages to the public including a possible rate cut, announced by one of the officials. "People are entitled to say: Where does the ECB really stand?" says Jonathan Hoffman, chief European economist at Royal Bank of Scotland Financial Markets. This statement was then discarded by the bank as a mistake.