Europe could raise interest rates next month

/ Source: The Associated Press

The European Central Bank's chief says interest rates could be raised at the next policy meeting in April in light of the sharp rise in inflation in the 17-country eurozone.

Speaking after the bank left its main interest rate at the record low of 1 percent, President Jean-Claude Trichet said "strong vigilance" was warranted. In the past Trichet used that wording to signal to markets that a rate increase was due in coming months.

Trichet said risks to prices are "on the upside" and that the whole governing council is "prepared to act in a firm and timely manner."

The markets on Thursday took Trichet's comments as a clear hint that rate increases are on the agenda and the euro spiked above $1.39.