Will They Raise Rates In June?

No, I'm not talking about the FOMC. From Bloomberg:

European Central Bank council member Klaus Liebscher signaled the bank may raise interest rates in June to curb inflation and said policy makers may lift their estimate for 2006 economic growth in the dozen euro nations.       

While the ECB doesn't want to increase rates next month, there is ``no all-clear'' on inflation and "still a need for action,'' Liebscher, who heads the Austrian central bank, said in an interview in Vienna yesterday. "The next meeting is in June. If you look at the whole picture that we've painted, then I'd say that's the next appointment.''         

Liebscher's comments echo those by ECB President Jean-Claude Trichet on April 6, when the bank kept its main lending rate at 2.5 percent and quashed investors' expectations for an increase in May. Trichet said economic growth is strengthening and pressure on inflation is mounting, though his remarks on timing sent the euro to its biggest drop in two weeks...

While investors pared expectations for higher rates after Trichet's April 6 comments, they're still betting the ECB will raise the benchmark to 3.25 percent by the end of the year with the next move in June, futures trading shows.         

Asked if markets had correctly understood the ECB's message, Liebscher replied: "Yes, I think so.''