( dpa )- The European Central bank threatens to raise interest rates to parry inflation risks but its next move will probably be a cut owing to a global economic slowdown, analysts say.
Declarations by senior ECB directors known for conservative monetary stances reinforced last week the majority of economists who exclude any new monetary tightening in the 15-nation eurozone .
The president of the German central bank, Axel Weber, said Wednesday that one should not "over-dramatize" a recent inflation increase to a six-and-a-half year high of 3.1 percent.
Luxembourg central bank president Yves Mersch pointed meanwhile to factors that "mitigated" inflation, such as a slowdown in the US economy and the effects of a financial market crisis, noted Michael Schubert, who tracks the ECB for Commerzbank .
Both comments by central bankers who sit on the ECB governing council sent the euro lower against the dollar on foreign exchange markets.
In the end however, not much was new. The ECB has said for weeks that the current "hump" in inflation was temporary, with a decrease forecast later this year.
That is its main argument against stiff wage increase demands which it warns could transform the hump into more longer-term inflation.
Concerned that salary increases could provoke what the bank calls "second round" effects, an ECB statement repeated Thursday that it was "prepared to act preemptively ," meaning it was ready to raise rates.
"I think the market has been impressed, last week, by Jean-Claude Trichet's hawkish tone," said Gilles Moec , economist at Bank of America.
ECB president Trichet used the same expression on January 10 when the bank left its main lending rate unchanged at 4.0 percent.
"Weber and Mersch probably intended to correct this over-interpretation and decided to stick to the ECB statement, which acknowledged downside risks to growth," Moec told AFP.
Communications policy is vital for the ECB, and the simple use of a single word is rarely innocent.
"Such comments support our long-held view, that not the hawkish tone of recent weeks will be decisive for coming rate decisions but news about the development of the economy and the inflation rate," said Schubert at Commerzbank .
That is, one should not really believe the ECB message but rather focus on economic data and inflation forecasts.
Foreign exchange markets appeared furthermore to be taking that path.
Attempts by Trichet to correct Mersch's message by referring back to the one issued Thursday left forex dealers unimpressed.
With fears of a US recession on the rise, an event that would diminish the prospects for the entire world economy, it seems unlikely that the ECB would go against the flow by raising its rates.
The US Federal Reserve and Bank of England have already begun to lower their main lending rates and are expected to continue.
When inflation begins to ease and signs of an economic slowdown become more tangible, the ECB could begin to evoke or even envisage a decrease of its main rate, most economists believe.
Commerzbank has revised its prognosis and now sees the ECB cutting the cost of credit in mid-year and no longer at the end of 2008 for three reasons.
The economy will deteriorate more markedly than expected at present, it says, inflation should settle back around 2.5 percent mid year, and the ECB will see that "wage increases will not have been excessive" and that the feared "second round" effects will not occur.