Interest rates still look as though they are on an upward trajectory.
Reuters reports the Bank of England's interest rate decision yesterday:
The Bank of England kept interest rates steady at 4.75 percent for the second month running on Thursday, but most economists predict a hike next month.
The European Central Bank didn't wait. Bloomberg reports:
ECB policy makers meeting in Paris increased the benchmark lending rate to 3.25 percent from 3 percent, as predicted by all 50 economists surveyed by Bloomberg News. Investors anticipate an increase in the rate to 3.5 percent this year, and Trichet said "I would not say anything that would correct this sentiment." He declined to comment on the course of rates next year.
Even the Federal Reserve may have to raise rates again. From another Reuters report:
U.S. interest rates may not be high enough to quell a recent bout of inflation, Philadelphia Federal Reserve President Charles Plosser said on Thursday...
"There remains some risk that policy is not yet firm enough to ensure a return to price stability over a reasonable time horizon," Plosser told the CFA Society of Philadelphia.
"We need to remain vigilant and recognize that maintaining the current stance of policy, or even firming further, may be in the best interests of the economy's long-run performance," he said.
He worried that inflation excluding food and energy costs could remain above 2 percent for at least another year but declined to say what would be an optimal inflation rate.
All of this is not stopping stock markets from also continuing their upward trajectories in Europe:
European stocks rallied to close at their highest levels in more than five years on Thursday, boosted by takeover activity and a rebound in commodity prices...
The pan-European FTSEurofirst 300 index jumped 0.6 percent to end at 1,410.1, its strongest close since July 2001 and pushing up gains to about 10 percent so far this year.
Fund managers said equities were supported by strong corporate earnings and global growth despite an increase in borrowing costs in Europe...
Around Europe, London's FTSE 100 index closed 0.6 percent stronger, its highest close since May 2006. Paris's CAC-40 rose 0.6 percent and Frankfurt's DAX advanced 0.5 percent.
...and in the US:
U.S. stocks rose on Thursday, pushing the Dow Jones industrial average to a record closing high for a third day and the S&P 500 to a fresh 5-1/2-year high...
The Dow Jones industrial average gained 16.08 points, or 0.14 percent, to close at a record 11,866.69. The Standard & Poor's 500 Index added 3.00 points, or 0.22 percent, to finish at 1,353.22. The Nasdaq Composite Index climbed 15.39 points, or 0.67 percent, to close at 2,306.34.