Soaring euro, slowing economy dampen odds of eurozone rate hike

FRANKFURT, Oct 2, 2007 (AFP) – The European Central Bank is keeping an eye on inflation but the chances it will raise its base lending rate Thursday are nil owing to the soaring euro and signs the eurozone economy is slowing down. In Britain, the Bank of England was also expected to hold rates steady, two weeks after the US Federal Reserve slashed its key federal funds rate by a half point to 4.75 percent.
A poll of 30 economists by AFP/Thomson Financial News was unanimous in its forecast for no change in the rate that determines eurozone borrowing costs when the ECB meets in Vienna on one of its biannual trips to a member capital.
The ECB has repeatedly pointed to rising prices as a way of keeping its options open, and governing council member Alex Weber stressed recently that a central bank’s role “is to always keep that in mind.”
But though an increase from the current 4.0 percent was considered a done deal a month ago, economic and financial landscapes have taken on a distinctly autumnal look as oil prices and the euro hit record highs.
On Monday, the single European currency hit a new record of 1.4283 dollars, and while oil prices have eased back from their peak last week, they remain close to 80 dollars a barrel, threatening