European Trade Union Confederation (ETUC) General-Secretary John Monks said ‘At a time when confidence is low, unemployment is rising and the European Commission has just revised its euro area growth forecast down to a paltry 1.2%, it is incredible that the ECB is considering higher interest rates. All the forecasts for wage and salary growth indicate that there is no danger of higher oil prices being passed on to wages.’

The ETUC insists on the need to keep interests rates low until there is clear evidence that the euro area economy has finally emerged from its period of below-potential output, now in its fifth year. ECB talk of raising rates, based on higher import prices and indicators such as money supply figures that are not considered useful by any other major central bank, has already pushed up the euro and bond yields and unsettled the stock markets. Instead of providing reassurance to Europe’s workers and investors, M. Trichet’s comments will have negative effects on consumer and investor confidence, which is just beginning to recover.