The Kiel-based Institute for World Economics, one of five that prepare twice-yearly reports for the government, said the bank will raise the lending rate in „summer” and „autumn.” A rate higher than 4.25% is „not very likely,” the institute said in an e- mailed statement. „The economic outlook has improved compared with the European Central Bank staff’s previous projection,” the institute said. The bank sees a risk that „underlying inflation may pick up somewhat, especially since the upward trend in wage agreements should strengthen.” ECB policy makers have indicated they want to curb inflation in the 13-nation region by removing „monetary accommodation,” taking rates to a level that no longer stimulates the economy. The ECB last week raised its benchmark rate by a quarter percentage point to 3.75% and said its monetary policy is still „on the accommodative side.” (Bloomberg)
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