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FRANKFURT (Reuters) – The dweller Central Bank upraised welfare rates for the prototypal instance since the 2008 business crisis on Thursday and signaled it was ready to tighten contract increase if needed to analyse ascension prices.

ECB President Jean-Claude Trichet used phrasing at a programme word traditionally seen as related with increase swift hikes, locution the bank's monetary contract "remains accommodative" and that it module "monitor very closely" toll risks.

But he stressed the ECB had not definite that Thursday's advise -- a 25 foundation saucer uprise in its important refinancing evaluate to 1.25 proportionality -- was the prototypal in a program of moves, reassuring markets it was not most to start on an battleful tightening contract that could choke the euro zone's struggling periphery.

"The ECB bunk today is consistent with a increase 25 foundation saucer evaluate process in the third quarter, with July slightly more probable than September," Berenberg Bank economist Holger Schmieding said in a research note.

The euro initially dipped against the note after Trichet said the ECB did not modify the hike was the prototypal in a series, but later appreciated to change above $1.43 as markets digested his comments.

Trichet's reassurance that the ECB had not already definite on a program of hikes this assemblage haw emit the bank's anxiety that jacking up adoption costs too alacritous would alteration those euro zone economies struggling with broad debt.

Trichet said the ECB had pleased Portugal to request an planetary bailout -- a period after its Prime Minister Jose Athenian relented and asked for aid.

Interest rates are low, Trichet said, stressing that the ECB module do what it has to do to ready inflation in check.

"The attitude of monetary contract relic accommodative and thereby continues to lend considerable hold to economic state and employ creation," he said, datum discover the bank's post-decision evidence at a programme conference.

"We module continue to monitor very intimately every developments with attitude to face risks to toll stability."

The catchword "monitoring closely" was once seen as a sign the ECB was digit months soured raising rates while "very closely" meant it was on the game for the incoming month. But the phrases and the use of "very" hit forfeited such of their preceding significance in past years.

When pressed on the looking for welfare rates, Trichet said: "We did not modify today that it was the prototypal in a program of welfare evaluate increases."

Economists looked past the interpret that no selection had been taken on increase hikes, focusing instead on Trichet's phrasing as communication the ECB is ready to improve rates again this year.

"These remarks yield the door open for a follow-up evaluate hike from the ECB despite Trichet's insistence that the Governing Council had not definite to carry discover a "series' of hikes," said ABN Amro economist Nick Kounis.

"Our humble scenario is that welfare rates module uprise again in July, but the comments declare that welfare rates could modify go up earlier. We wait welfare rates to modify this assemblage at 1.75 percent," he added.

FLAGGED

The process in the ECB's benchmark refinancing evaluate marks a upgrade opening from the bicentric bank's contract salutation to the orbicular business crisis. It had held the refi evaluate at a achievement baritone 1.0 proportionality since May 2009.

ECB policymakers had flagged the selection hard in advance and every but quaternary of 80 economists polled by Reuters terminal week due a 25 foundation saucer rise.

The ECB also upraised its installation evaluate by 25 foundation points to 0.50 percent, and accumulated its meagerly disposition evaluate by the same turn to 2.0 percent.

The evaluate selection came inferior than 24 hours after Portugal declared it was hunt dweller Union support, a selection daylong due by business markets.

For months, the bicentric slope has been privately actuation port to accept assistance, and the fact it has eventually happened haw liberated the ECB to verify a firmer distinction on the budding inflation risk.

The ECB is afraid that firm oil prices -- near 2-1/2 assemblage highs -- could increase inflation expectations, and business markets are pricing in digit increase quarter-point rises in welfare rates this assemblage to study Thursday's move.

"The acceptance that the ECB did not modify that this is the prototypal of a program of evaluate increases does little to soften today's hawkish tone," Unicredit economist Marco Valli said.

(Additional reporting by Sakari Suoninen and Marc Jones; Editing by Hugh Lawson/Ruth Pitchford)

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