The European Central Bank raised interest rates on Thursday to 3.25 percent, their highest level in almost four years, and signalled another increase by the year end.
But after the quarter percentage point hike ECB President Jean-Claude Trichet avoided giving any clear message on rates in 2007 beyond stressing that inflationary risks persist despite a drop in oil prices.
Trichet said a further climb in oil prices could not be ruled out and the ECB expected inflation to rise again towards the end of the year, staying above its 2 percent ceiling into 2007.
"The Governing Council will therefore continue to monitor very closely all developments so that we ensure price stability over the medium and longer term," he said in his introductory statement at a news conference.
"Our monetary policy ... remains accommodative. If our assumptions and baseline scenarios are confirmed it will remain warranted to further withdraw monetary accommodation."
Thursday's rate rise had been widely expected by financial markets and analysts, who generally expect the ECB to tighten credit costs again in December to 3.5 percent. Trichet confirmed such thinking was reasonable.
"You mentioned that the market has in mind moves. I would not say anything that would correct this sentiment," he told reporters at the news conference.
But Trichet would give no ground when pressed on 2007, where financial futures markets had been pricing a 50-70 percent chance for a further rate rise in the first quarter.
"I responded to a question which was addressing the expectations until the end of December and I had said I have nothing to say that would be aiming at moving these expectations and I stick to what I said," he said.
This minimal guidance for the policy course in 2007 caused European government debt futures to swing from gains into losses, while the euro slipped against the dollar.
"The next interest rate hike seems unlikely to come before the December meeting. Furthermore, Mr Trichet was careful to give few clues as to the ECB's intentions in 2007," said Howard Archer, economist at Global Insight.
Trichet said the ECB would look through monthly and quarterly fluctuations in economic data, such as the recent retreat in oil prices that has pushed down inflation to 1.8 percent in September, meeting the ECB's price goal.
The risk remains that oil prices will spike upward again, and moreover spending power freed up by the oil price drop when growth is already strong could prove inflationary, he said.
Even if growth in the giant US economy slows by 1 percentage point, that would cut only about 0.2 percentage points from eurozone growth, he said, indicating this would not derail an economy expected to expand about 2.1 percent next year.
Similarly, Trichet expressed confidence that any weakening due to a rise in German value-added tax in 2007 would be temporary. Analysts have cited both these factors as reasons why the ECB may pause in rate tightening after a December hike.