Amid the rising pressures on the euro area and the prevailing uncertainty, the signal for a likely rate hike from the European Central Bank is gone unnoticed as the euro lost all the gain recorded on the higher yield on the back of the worsening debt crisis.

The monthly ECB Bulletin today reiterated what Trichet provided in the press conference following the decision, where he stated strong vigilance is warranted amid rising inflation pressures which data today confirmed is steady at 2.7% in May in line with the flash estimate.

The recent data confirm the positive underlying momentum of economic activity in the euro area, while uncertainty remains elevated the bulletin said. The monetary policy remains accomidative and strong vigilance is warranted as the Governing Council will act in a firm and timely manner on the basis of this assessment.

On growth, the June 2011 Eurosystem staff macroeconomic projections for the euro area, which foresee annual real GDP growth in a range between 1.5% and 2.3 % in 2011 and between 0.6 % and 2.8% in 2012. Compared with the March 2011 ECB staff macroeconomic projections, the range for 201 has been revised upwards, while the range for 2012 remains broadly unchanged. The June 2011 Eurosystem staff projections are broadly in line with recent forecasts by international organisations.

On inflation, the June 2011 Eurosystem staff macroeconomic projections for the euro area foresee annual HICP inflation in a range between 2.5% and 2.7% for 2011 and between 1.1% and 2.3% for 2012. In comparison with the March 2011 ECB staff macroeconomic projections, the range for HICP inflation in 2011 has been revised upwards, largely reflecting higher energy prices. The projection range for 2012 has narrowed somewhat.

On fiscal policies, the ECB urged the member nations to continue the implementation of ambitious and far-reaching structural reforms which is now required in the area to strengthen substantially its competitiveness, flexibility and longer-term growth potential especially for countries suffering from huge fiscal imbalance.