Michael Woolfolk of Bank of New York Mellon says even though ECB
President Trichet did not use the word "vigilance" to signal an
imminent rate hike, "it is clear that a rate hike is in the works for
later this summer, perhaps as early as next month." Trichet's "direct
statement that a rate hike at the July meeting was 'possible' certainly
is as close to signaling a hike without actually precommitting to
one,"Woolfolk says. Nevertheless, he questions why Trichet chose not to
usethe "V" word, especially since the ECB President recently indicated
that it had not been removed from his vocabulary. "The answer may well
be that doing so could push the euro back towards record highs against
the dollar and he would like to avoid doing this if possible," Woolfolk
says