Expectations of rate rise

Market expectations of an interest rate rise this week were reinforced before the weekend when the European Central Bank stepped…

Market expectations of an interest rate rise this week were reinforced before the weekend when the European Central Bank stepped up its hawkish comments on the risks of inflation in the euro zone.

Mr Ernst Welteke, the Bundesbank president, said it was necessary to curb price risks "as soon as possible" to ensure growth continued unhindered by inflationary pressures.

Economists said Mr Welteke's comments, which follow similar remarks by Mr Otmar Issing, the ECB's chief economist, and a hawkish central bank monthly bulletin recently, increased the likelihood that the bank's council would lift rates on Thursday.

Mr Welteke's comments "only make sense if the ECB is planning a rate move next week", said Ms Alison Cottrell, economist at Paine-Webber in London. But opinion among economists remains divided over the likely size of the increase, with the majority expecting a 25 basis point increase, but some forecasting a 50 basis point rise.

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Economists at Dresdner Kleinwort Benson in Frankfurt said Mr Welteke's remarks suggested the ECB was preparing the markets for "a more decisive move - 50 rather than 25 basis points".

Mr Mark Cliffe, economist at ING Barings in London, also said the tone of the German central banker's comments indicated a half-point rise was now on the cards.

Several economists expect the euro to come under renewed pressure this week as any rate rise needed to keep the lid on inflation might hurt growth prospects.

MONDAY

Results: ACG AG (H1), Atria (Q2), Fortis (H1), ONBanca (H1), Tekla (H1).

A.G.M.s: Jurys Doyle, Grosvenor Suite, Berkeley Court Hotel; AGFB AG, Radiotronica, Refugium, GTG AG.

Indicators: Irish industrial stocks (Q1).

TUESDAY

Results: Trintech (Q2), Persimmon (H1), Informa (interim), Clariant (H1), Damgaard (H1), Dt Telekom AG (H1), Swisscom (H1).

A.G.M.s: European Telecom, Madisons (e.g.m.), Autania AG, Herzog Telecom, Krefeld Hotel, Lebensart AG, Spar AG.

Indicators: Irish agricultural prices indices (June).

WEDNESDAY

Results: Kerry Group (H1); Smurfit (interim); IFG (interim); Arnotts (H1); FBD (interim), Morse Holdings (full year), Domestic & General Group (full year), Save Group (interim), BGR (interim), Britannic (interim), CMG (H1), Johnston Press (interim), Rentokil (interim), Hammerson (interim), Delcam (interim), KPN (H1), Laurus (H1), Varetis AG (H1), Feldschloess (H1).

A.G.M.s: Jasmin, Atlantic Telecom, Bau-Verein HH, Pegasus AG, Sapec.

Indicators: Irish capital assets in industry (Q1).

Others: Publication by the ESRI of The Irish Graduate Labour Market: A Six Year Follow-Up Survey Of Third-Level Graduates From 1992

THURSDAY

Results: Conduit (QI), Hays (full year), Billiton (full year), Sheffield Installations (interim), Mallett (interim), London Bridge Software Holdings (interim), Intercare Group (interim), Costain Group (interim), Amec (interim), Heywood Williams (interim), Rexam (interim), VI Group (interim), CMB (H1), ComputerLinks (H1).

A.G.M.s: ITG, Westbury Hotel; Faupal Trading, Scottish & Newcastle, Benroubi (e.g.m.), Deinboeck AG, Gesco AG, Br Mannesmann, Dt Real Estat.

Indicators: Irish non-EU trade (July), vehicle registrations (May).

FRIDAY

Results: Go-Ahead Group (H1), Tarsus Group (interim), Whatman (interim), Schroders (interim), Pirelli (H1), Rabobank (H1), VA Stahl (Q1), Recticel (H1).

A.G.M.s: Anglesey Mining, British Bloodstock, Northacre (e.g.m.).

Indicators: Irish unemployment (August).

Others: Small Firms' Association, annual lunch, Burlington Hotel.