European Central Bank President Jean-Claude Trichet has given a strong indication that there will be further increases in the official interest rate for the euro zone in the near future.
He said today financial markets were "perfectly sensible" in pricing for such an eventuality.
Inflationary risks are clearly to the upside and the ECB must make every effort to make sure that higher oil prices do not feed into wage and price increases, Mr Trichet told a European Parliament committee.
"When I look at forecasts made by markets as far as future movements are concerned, they are perfectly sensible," he said when asked whether the ECB was poised to raise rates again.
Financial markets have fully priced in a quarter percentage point ECB rate hike to 2.50 per cent at its March 2nd meeting, which would mark the central bank's second rate tightening in three months.
Markets are less certain for the rest of the year, but generally expect rates to reach about 3 per cent by year end.