LONDON, Dec 6: The euro turned firmer on Thursday, making solid gains after the European Central Bank chief Jean-Claude Trichet pointed to the possibility that eurozone interest rates could still head higher.

Following the ECB’s decision to hold its key rate at 4.00 per cent, Trichet told a press conference he was determined to counter growing inflation risks.

Significantly, he revealed that the ECB had actually discussed the possibility of a rate hike at its meeting Thursday, undercutting market talk that Europe needs lower lending costs to cope with the global credit squeeze.

News too that the ECB had raised its inflation forecasts and downgraded its growth predictions added to the sense that the central bank is going to focus resolutely on prices whatever happens.

“A wait-and-see approach to monetary policy is likely to be prolonged over the next few months but if anything, the ECB is more likely to raise than cut interest rates at this stage,” said Audrey Childe-Freeman at CIBC World Markets.

In afternoon trade, the euro was at $1.4633, up sharply from $1.4566 in early deals and $1.4612 late on Wednesday in New York.—AFP