Attracting Unwelcome Interest

After years in slow motion, European economies are showing signs of a modest revival: business confidence is buoyant, investment is rising and the Continent's thrifty consumers are even loosening their purse strings a little. But the European Central Bank (ECB) is not cheering. Last week, ECB president Jean-Claude Trichet confirmed to the European Parliament that the bank is planning to raise interest rates in the near future to combat what it sees as growing inflationary pressures.

The first hike could come as early as this week. Trichet insisted that rate rises will be limited in scope and that...