June 25 (Bloomberg) -- European Central Bank President Jean- Claude Trichet said while he didn't signal a series of interest- rate increases, the bank never pre-commits.

``I said that we could increase rates by a small amount in order to secure a solid anchoring of inflation expectations,'' Trichet told the European Parliament in Brussels today. ``I didn't say that we could envisage a series of increases. That being said, of course we never pre-commit.''

Trichet on June 5 said the bank may raise its benchmark lending rate by a quarter-point to 4.25 percent in July to contain inflation even as economic growth cools. Investors responded by betting the ECB will raise rates twice this year. Record oil and food prices pushed inflation to 3.7 percent last month, well above the ECB's 2 percent limit.

Trichet's comments today ``certainly did not seem to rule out more than one rate rise,'' said Julian Callow, chief European economist at Barclays Capital in London. ``It's not really saying much to be saying that the council, or members on it, are not envisaging a series of rate increases. Such comments seem if anything to suggest a slightly higher risk that the ECB might raise rates more than once.''

When the ECB embarked on its last rate-tightening cycle in December 2005, Trichet said the bank was ``not engaging in a series of increases.'' It proved to be the first of eight steps.

`Heightened Alertness'

Trichet told lawmakers today that inflation pressures in the euro area have ``intensified further in recent months'' and that the bank is in a state of ``heightened alertness.'' Policy makers are ``strongly determined to secure the firm anchoring of inflation expectations,'' he said.

Those expectations, measured by the breakeven on five-year French inflation-indexed bonds, rose to 2.51 percent yesterday from 2.12 percent in March.

ECB policy makers are concerned that companies will raise prices and workers will demand higher wages to compensate for the increase in the cost of living.

``The Governing Council remains particularly concerned that current elevated inflation rates may become entrenched in private inflation expectations and lead to second-round effects,'' Trichet told lawmakers. ``In particular, wage growth may be stronger than anticipated.''

Still, euro-region manufacturing and service industries contracted in June as companies grappled with surging energy costs and the euro's 16 percent appreciation against the dollar in the past year, which has made exports less competitive.

Trichet said the region's economic fundamentals remain ``sound.''

To contact the reporters on this story: Gabi Thesing in Frankfurt at gthesing@bloomberg.net

Last Updated: June 25, 2008 06:22 EDT