Will inflation force European Central Bank's hand

The European Central Bank is expected to leave rates unchanged at 4.00 percent, but as usual traders will pay keen attention to the content of ECB President Jean Claude Trichet’s remarks at the post announcement press conference. Thus far, Mr. Trichet has been consistently hawkish, focusing on price stability rather than growth in the 15 member union. Mr. Trichet has good reason to worry about inflation, as the latest CPI readings in the region reached their highest levels in a decade printing at 3.6 percent in May, which is well above the ECB’s 2 percent target. Fueled by higher energy prices and rising food costs, the Euro-zone economy is unlikely to see any meaningful relief in inflationary pressures until oil prices fall significantly from their record highs. Euro Pound exchange rate is currently .7900