Business leaders from Europe have warned that the euro may suffer if the EU fails to build up prevailing political organizations in order to stabilize the European Central Bank. President of Business Europe, one of the leading Pan-European Business organizations, Ernest-Antoine Seilliere, said that at present there is no stability between the supremacy of the European organizations and the European Central Bank. He also said that they consider the euro will suffer in the long term if there is no political support, especially by the eurogroup. Seilliere said this with the reference to the eurozones 15 financial ministers who hold official meetings every month.

As the euro ascended to its record breaking high in the markets of the foreign exchange, reaching 1.5347 dollars, Seilliere spoke to the reporters about the threats to euro in the near future.

On Friday morning, the euro had reached a record high of 1.5347 dollars against the British pound. Business Europe did not mention its desire to observe the tough responsibilities in co-coordinating the economic policies of the eurozone. Nevertheless, Seilliere did comment on accounts of the growing concerns of European Union on the increasing euro against the Asian currencies like Chinese Renminbi and Japanese Yen.

Seilliere also said that they were looking forward to eurogroup attaining more authority, power and genuine prospective when it holds meetings. Prime Minister, Jean-Claude Juncker has done much, but there is still more that can be done, added Seilliere, in reference to the leader of Luxembourg who holds meetings of eurogroup. He even said that synchronization in the European region for its economic policies is very much essential. He requested the Luxembourg leader to join forces with Washington, Beijing and Tokyo and discuss growing concerns of the world’s economy in order to maintain the monetary system of the world.

It may not be possible to hold talks immediately, but it can be done in the near future, otherwise the euro will decline to 1.80 dollars, said Seilliere. He even questioned the legality of the European Central Bank self governing system which entails much political involvement. Seilliere pointed out that due to agreements that currently govern the monetary system of the European Union , the ECB was in fact eurozone’s most powerful organization. This makes the reckoning of influence in economic discussions and global monetary difficult for the eurozone.

The supremacy of euro was undeniably making life hard for some of the export sectors in the European region, said Seilliere. Nevertheless, some of the business leaders in Europe cherished the supremacy of euro because it was helping to maintain the inflationary force of soaring gas and oil prices, added Seilliere. The resolution the competitiveness problem in Europe lies in labor market reforms, A better education system, and business innovation, said Seilliere. He also said that these business leaders should not miscalculate the importance of euros supremacy.

Tags: ECB: European Central Bank News, European Economy News, European Union News by Vanessa Clark
No Comments »

On 4th March, finance minister of Europe made clear that their main concern about the euro against the US dollar. They believed that they had not forced down to manage the intercessions of the central bank in the markets of foreign exchange. Finance ministers from the Eurozone’s 15 countries issued a report on 3rd March stating that in these situations they are very much concerned about the movements of the exchange rates and they believe that the present movements are shimmering economic essentials. As the euro mounted to 1.5275 dollars which was at the highest level since 1999, the finance ministers did began to react. During the previous year the euro had climbed by 6 % against the US dollar which is stronger than the Japanese Yen and Renminbi of China.
Some of the financial market analysts distinguished that the report of Eurozone was comparable in tone to which was utilized before the ECB mediated in September 2000 in support of the euro. On 3rd March financial ministers brought to notice the reality that ECB President Jean-Claude Trichet had stressed before having a conversation, which the authorities of United States had assumed that it was in the interest of US nationals to possess a strong dollar. In the financial market this was taken as a warning sign made by Trichet about the dollar.
However on 4th March, finance minister of Greece Mr. George Alogoskoufis said that there had been no debates between his colleagues on the common financial market intercessions by the US Federal Reserve and ECB. “There were no debates on that between us” said Alogoskoufis. He even added by saying that there was a minor increase of interest regarding the developments of currency market as the instability prolongs and this is what they do not prefer. However this instability does not mean to be drastic, it is a universal dilemma and not only the problem of Europe. He said that on their own they cannot do anything and so they need assistance from all the European countries.
The Eurozone finance ministers group chairman Mr. Jean-Claude Juncker did not even comment on the interventions of the central bank. He said that he believes this might be wise enough to provide goals to the financial markets. However, some of the Eurozone countries like Netherlands and Germany argued that there are benefits in the strength of their currency, which is serving to hold the inflation that is at present at a 14 year high. Moreover they observe modest impact on the export performance of Eurozone.
President of European Commission Jose Manuel Barroso said that the viewpoint was by no method miserable, even though in the last month European Commission had stopped Eurozone’s economic growth forecasts for the year 2008. He also said that they were facing financial headwinds which may have been strong enough during the previous years to sink them. However, at present Europe is beginning to develop and also produce more jobs. At present the employment rate in the region is at the highest level at 66 % and the unemployment rate is at the lowest level at 6.9 %.

Tags: ECB: European Central Bank News, European Economy News by Vanessa Clark
No Comments »

The European inflation remained at a record high of 3.2 % in the month of February. This will further enhance possibilities of the ECB’s rate of interest to be left tightly on hold at the council meeting on Thursday the 7th of March. The ECB overturned its representation as a sluggish business, through its quick response in the previous year due to the warning of financial markets grabbing up and leading an example in forcing emergency liquidity. However, the inflation information on Monday pressed on higher due to fuel and food prices which mean an extra watchful nature is possibly to overcome on the 7th of March.

ECB president Jean-Claude Trichet argued that the main task of the bank is to fight inflation, the task which is undoubtedly different from its responsibility to ensure the systematic implementation of the financial markets. The primary interest rate of ECB is unchanged at 4 % since the month of June last year despite clear signs which show European economic development has severe cuts and slowed down in borrowing incomes by the Federal reserve of United States. Trichet was very much worried about the interest of US in the strong dollar; however the main concern for ECB is about the flow in inflation. The prices for food and fuel seem to be the main concern for the bank.

As the European Central Bank expects to revise its predictions for the development in the present year significantly, it also predicts to revise the inflation to be upwards. Even in the coming year it could show an enhanced threat where the Eurozone inflation could be above the target which is below the normal 2 %. However, few of them are worried that the bank is taking the economic threat too lightly. Marco Annunziata said he feared that the ECB would fall in a trap while trying to avoid the considerable slowdown of growth. Development is slow due to higher inflation in the commodity prices whereas contraction in the credit is not yet been seen in the statistics added Annunziata.

Even as the improvement in the Eurozone was at a record high against the US dollar and also on the basis of trade-weighted controlling the development, it appears that this is even viewed as useful in dealing with the price demands. The vice president of ECB Lucas Papademos disagreed that the impact is not possibly to be significant on the economic activity of the financial market chaos. According to the ECB statistics the borrowing business in the Eurozone raised at the record high which approached 15 % in the month of January.

According to the indices of the purchasing manager, the main concern was in the manufacturing unit of Spain were its production fell for the first time in more than five years in the month of February. However, Netherlands and Germany seemed to be enduring the financial blizzard better. On the other hand ECB has changed its attitude on the possible course of the interest rates. Jean-Claude Trichet normally stressed on the curiously high altitude of insecurity that emerged to open the doors for these cuts.

Tags: ECB: European Central Bank News, European Economy News by Vanessa Clark
No Comments »

Guy Quaden, ECB council member said that the delay in the US economy would be more distinct than expected which suggests that ECB would amend its development forecasts prepared in the month of December. On February 12th Quaden told the reporters that they have to forget what had happed in December and try to reassess it. He even said that it is obvious that the delay in the United States would be extra pronounced than the earlier forecasts.

During the last week Jean-Claude Trichet the ECB president said that the insecurity about the forecasts for the economic developments is curiously high. On 29th January the International Monetary Fund reduced its development forecasts for the Euro region by almost half point to 1.6 % since the Housing markets in US slump threatens to hold back worldwide economic development.

Quaden also added that even if the Euro region is not completely dependent on the United States compared to the previous year then they would not say that they are resistant, however certain corruptions through the channel of economic markets is substantial. According to the projections of December that would be revised in the month of March, until now the ECB anticipates development in the 15 nations of the Euro region to slowdown to 2 % in the present year from 2.6 % in the year 2007.

With reference to the last week’s conference of the governing council of ECB, Quaden said that they have stressed out more than the earlier downfall that risked the developments in the region. It was the tense situation in the month of December and the slowdown of development which may be profound due to the outcome of the increase rate over the average term.

Inflation demands

The inflation in the Euro region was up to 3.2 % in the month of January, the best since last 14 years and higher than the ECB’s 2 %. Following the Federal Reserve of US and the reduced interest rates in the Euro region, the ECB seems to be in tremendous pressure since the development prospects got worse. Dissimilar to the Federal Reserve, the primary consent of ECB is to hold inflation.

The standard rate of European banks is at 4 % and the policy makers will have a meeting on 6th March to decide on the rates. Most of the market traders did guess that the economic hold back will force the European Central Bank to shift its workings on the monetary policies. The oblique rate for the month of December on the Euribor was at 3.45 %, behind from 4.36 % which was in 2007.

Emergency Cut

The Federal Reserve reduced its standard rate by 1½ % point to 3 % point on January 30th, subsequent to the three quarter point cut a few days earlier. The Federal; Reserve pointed out that it may reduce the rates again in order to avert the US economy from falling into a slump. The upcoming information on the economic development in the Euro regions 15 nations is said to be mixed exclaimed Quaden. Belgian and German market assurance suddenly increased in the month of January which indicated the development in these markets may possibly survive the slowdown in US. He even said that they will monitor, discuss and analyze the situation even when they maintain their rates steady.

Tags: ECB: European Central Bank News, European Economy News by Michael Greene
No Comments »

Jean-Claude Trichet, the European Central Bank President, assumed that the threat to the financial development would increase if the investors gamble on the rate of interest that are acceptable. On the 9th of February, Trichet told the reporters that they have made a reassessment of all the threats in the financial markets that have generated high doubts, as a result from the perspective the threats are on the shortcoming. When Trichet reported this news he was in a conversation with the central bankers and the financial ministers from the members of Tokyo’s Seven Nations. Following the ECB’s target rate at 4% the comments were echoed over the remarks made on 7th of February.

As the Federal Reserve of United States and the decreasing interest rates in the region of Europe’s 15-nation development predictions went down, Trichet was indeed feeling immense pressure from few of the European leaders which is led by Italy and France. When Trichet was asked about his remarks made three days back that suggested ECB would act soon, Trichet exclaimed that the assessment to continue borrowing expenses unaffected was the acceptable one. The Honk Kong Chief Asia Economist Glenn Maguire said that they would ultimately get to the circumstances where Europe cuts interest rates. He even added saying that it is harshly evocative of what they were doing in the previous years.

Betting By Traders

As traders begin betting the financial slowdown will in fact force the banks to reallocate their workings making them hold the interest rates at 4 % which was at the highest ever since 2001. The rates which were implied on Euribor future agreements for the month of December were at 3.33 %, which was at 4.09 % last month and 3.56 % last week: This signaled two interest rate cuts for this year. Following the remarks made by Trichet on 7th February, the Euro did fall to 1 %. The service industries of the region grew at the slowest pace in more than four years in the month of January and even the executive and consumer confidence dropped to a low in two years.

Ahead of Trichet’s meeting on Saturday in Tokyo, Christine Lagarde the French Finance Minister said that when people hear the initial notes of the symphony they are always waiting for what may come after. Dissimilar to that, the European Central Banker’s repeated Trichet’s suggestion that the European Central bank will not be hurrying to copy its counterpart US. Axel Weber the Bundesbank President told the reporters that they have their own community. Mario Draghi, Governor of Bank of Italy also said that due to the Federal Banks interest rate cuts the treat to the progress is actually considered to be very serious. Following that, Ben S Bernanke, the Chairman of Fed said that they recognize the inflation threat as it is the same in Europe, however it is expected that inflation will not be there for a longer period. At present it will continue to grow and they have to try to understand how long it will remain said Mario Draghi.

Tags: ECB: European Central Bank News, European Economy News by Michael Greene
No Comments »

Jean-Claude Trichet, the ECB President overturned the route and indicated that he is ready to cut down interest rates. As economic developments were faltering, it was for the first time in over five years that the interest rates would be reduced. However, in the previous week, Trichet had threatened to raise the interest rates as the economic reports suggested Europe was been infected by the US economies slower pace. As the executive and consumer assurance dropped down the countries service trading developed to a slower rate in the month of January. After the ECB did hold its interest rates at 4%, Trichet said that the hesitation about the outlooks for the economic development is strangely elevated.

Trichet even said that the 21 members of the bank did not consider the increase rates like it had been in the previous month. Moreover, the amount of rising businesses can counteract the economy of the United States. The Euro had dropped while the bonds climbed remarkably. In order to control inflation, ECB has been borrowing finance since June at the six year high. In the comparison, the Federal Reserve of US lowered its interest rates at a faster pace from 1.25 % to 3% in the last month since 1990.

Investors Expect Further Cuts

If incase the economic circumstances continue to worsen, then it is possible for further interest rate cuts exclaimed the economist in London, Sandra Petcov. Royal Bank of Scotland and BNP Paribus SA expressed their predictions for a further cut in interest rate as well as Rabobank Group NV predicts that the bank will reduce lending rates instead of keeping it stable. According to further dealings, investors raise expectations that ECB may cut its level for at least twice in the present year. The interest rate deals which mature in the month of December dropped to 18 points up to 3.34 %; it was 66 points lower compared to the rates of ECB. On 27th December it was up to 4.36 % and averaged 31 points extra compared to the rates of ECB fro the previous five years. On 6th February, the Euro declined from 1.4632 dollars to 1.4496 dollars and the earnings on the German bunds dropped to 5 points which is 3.85 %.

Slower Development

On 29 January, the IMF (International Monetary Fund) reduced its present year euro regions increasing estimation by half point up to 1.6 %. The IMF even cut its increasing estimates for Japan and US, the two largest economies of the world. On 6th of December, ECB estimated their economic increase of up to 2 % in the present year which was 2.7 % in the year 2007. ECB President Trichet exclaimed that the new information has established the ECB’s appraisal which risks the surroundings. As the subprime mortgages collapsed making the US economy to slip down, this related to the drop in the stock market. This drop increased the credit costs all over the world as most of the banks became hesitant to lend funds to each other. DAX index of Germany’s benchmark lost 16 % where as 12 % was the estimated loss occurred to Dow Jones Stoxx 600.

Tags: Interest Rates News, ECB: European Central Bank News, European Economy News by Michael Greene
No Comments »

According to a recent research which could raise the pressures on the European Central Bank to open the methods for cuts in interest rates, the economic market turmoil’s have knocked down the economic growth plans of Eurozone more than what they had anticipated. The sales mangers indices for the region of 15 countries were improved considerably downwards which was mainly based on the analysis info that was collected after the shares tumbled down in the month of January. They even recommended that the economy of Eurozone developed in January at the weaker rate ever since November 2004. The force was determined mainly in the service sector with productions showing an increasing growth.

In a quick distinction to the emergency measures taken by the US Federal Reserve, the European Central Bank is likely to leave its key interest rates unchanged at 4% at the interest rate meeting on last Thursday. At the 14 year elevation of 3.2 %, the inflation rate of Eurozone remains roughly above the target of central banks annual interest rates of 2 %. But, the increasingly ominous financial outlook has increased concerns that the European Central Bank President Jean-Claude Trichet could shift earlier to admit the possibilities of cutting the interest rates later this year.

Jacques Cailloux, the economist of the Royal Bank of Scotland exclaimed that the indices of Eurozone sales mangers were at present approaching a stage reliable with the reductions in the policy rates. This would release the surveys with the Economics of NTC even though there were concerns over inflation rates. Jacques Cailloux also said that it is likely to stop the central bank from trailing just before the second quarter; if not the equity markets would acknowledge further considerable losses. Some of the economists said that the new sale mangers survey was steady with the growth rate of almost 0.3% in this quarter which was considerably less compared to the rates of the last year. This suggested that the weaker patch which was experienced during the last year would still continue to extend into the year 2008.

The first round evaluations of the composite sales mangers indices that covered service and manufacturing companies and was based on the reactions, had pointed to extra steady slowdown. However, later responses led to the indices of January being improved considerably downwards from 52.7 up to 51.8, following 53.3 in the month of December. Recent reports showed that France still continued to account healthy developments in the month of January, however in sharp dissimilarities Spain witnessed output dissimilarities at the highest rate for the period of six years. Even, France and Germany witnessed robust employment growth, however again the image was not quite feeble in Spain. It was believed that in Spain, the rates of creating employment slipped to the lowest for more than four years. The indices of the service sector were improved harshly downwards to only 50.6 from December’s 53.1 that pointed to near stagnation in the actions.

Tags: European Stocks & Shares News, ECB: European Central Bank News, European Economy News by Vanessa Clark
No Comments »

The euro has enjoyed yet another significant trading session against the dollar, which has seen its value edge close to the $1.43 mark off the back of investor anticipation of more Federal Reserve interest rate cuts.

The dollar weakened yet further in Asian trading amidst fears that negative US data due this week could prompt the Federal Reserve to cut interest rates even further when they meet this month, a move that would cause further devaluation of the dollar across the globe. The dollar has seen significant losses since the Reserve cut rates by 0.5% points last month.

Meanwhile the value of the euro continued to ride high with anticipation of the European Central Bank maintaining interest rates at their current 4% level when their policy committee meets this week, which will continue to support the current strength of the euro against the dollar.

In Asian trade today the euro was up to $1.4283 against the dollar, edging ever closer to the landmark $1.43 figure. However, should prolonged strength in the euro become a more permanent fixture, businesses within the eurozone trading abroad may find themselves in significant difficulties.

Plane manufacturer Airbus have already issued a warning that a rate of $1.45 for the euro could lead to extensive job cuts, as it eventually becomes priced out of its market and is forced to cut fares.

The strong euro means that those trading in export goods outwith the eurozone, even within the EU, are facing uncompetitiveness and weaker sales in the short term, with unemployment a probable side effect.

Whilst many have called for eurozone interest rates to be cut amidst ongoing fears of the strong currency valuation, it is thought that Jean Claude Trichet will refrain from making any such announcement as he delivers the ECB’s verdict later this week, with the threat of inflation and overheating very much a primary consideration.

Tags: Exchange Rates News, ECB: European Central Bank News by stewart
No Comments »

European Central Bank President Jean-Claude Trichet has suggested that there is “no reason to doubt” the European economy and its current health, after growth was revised downwards by the European Commission to reflect a perceived slowdown.

After both France and Germany announced slower than expected growth over the second quarter of 2007, and in the wake of significant market unrest across Europe as a result of the sub-prime situation, the European Commission announced yesterday that it was revising growth downwards by a 0.1% point on the year, reflecting a downturn in growth from last year’s figures.

Mr Trichet was also quick to point out that credit rating agencies had a strong role to play in the ongoing credit crisis around the world, citing a conflict of interests between rating bank creditworthiness and accepting fees from the same institutions.

When quizzed about recent statements from Alan Greenspan, formerly Chairman of the Federal Reserve, which indicated that the US was in for a recession, Trichet dismissed the applicability of the US situation to the Eurozone economy, stating that recession is ‘not appropriate’ to describe the EU economy, and that on a fundamental level the thirteen-nation Eurozone was economically ’sound’.

Much of the market instability has been derived as a direct consequence of the US sub-prime lending sector. As a result of growing credit fears amidst a tightening liquidity environment, markets have been thrown into chaos with business investment and consumer borrowing significantly down. As a consequence, many global economies have opted to sit on the fence with economic policy until the situation is calmed, at the expense of their own domestic economies.

Whilst Mr Trichet suggested that recession was not around the corner for the European economy, he was quick to reiterate that at present, markets remain uncertain and that the extent of externalities from the US was interfering with the EU’s ability to regulate its own economy.

Tags: ECB: European Central Bank News, European Economy News by stewart
No Comments »

The European Central Bank has today announced its decision to maintain interest rates throughout the Eurozone over the next month, amidst growing fears of continued volatility in world markets.

The European Central Bank announced the move today after the meeting of its policy committee, in which it is widely expected the issue of current market conditions and mixed internal economic indicators were behind the decision to maintain rates at their current level.

Until the recent upset caused by ongoing sub-prime mortgage lending crisis, and fears of a credit crunch, analysts had expected the ECB to raise rates to 4.25% in a bid to reign in economic growth and prevent inflationary pressures.

The decision came unanimously from the committee, and was later justified by ECB president Trichet as being a prudent move given the recent unsettling market conditions caused by the US housing market.

Whilst he said that the fundamental aspects of European growth were in place, the extent of the upheaval from the US markets has made it impossible to make any policy decision other than maintaining rates at their current level.

With the European Central Bank having risen rates no less than eight times over the last two years, with rising inflationary pressures as a consequence of strong regional growth, analysts had expected that rates would continue to rise over this month to keep inflation in check.

However with growth slowing as a result of market unrest and falling investor confidence, the Bank have decided not to progress further with any rate intervention as a result of the impact of these external factors.

Similarly today, the Bank of England also announced its decision to maintain interest rates in the UK at 5.75%, for reasons similar to those borne by the ECB, which will see most of Europe freeze rates for the next period.

Tags: ECB: European Central Bank News by stewart
No Comments »

The European Central Bank are set to meet tomorrow to discuss interest rate policy amongst the thirteen nation Eurozone for the coming month.

The European Central Bank determines rate policy for the thirteen member states of the Eurozone, and is expected to keep rates on hold after early predictions of a rise failed to materialize as a likely option.

Analysts have widely predicted that rates will remain the same over the next month, with financial markets continuing uncertainty likely to be the main persuasive factor in the decision to maintain rates, along with tightening credit conditions across the globe.

Up until markets had been thrown into uncertainty by bad news from the US and the ongoing crisis in sub-prime lending, the European Central Bank had been expected to raise rates from 4% to 4.25% for the thirteen nations in the single currency zone.

Also scheduled for tomorrow, the Bank of England in London will be meeting to fix interest rates, which are again predicted to be maintained for the next month at 5.75% in order to allow the UK economy to settle down a find a rhythm unaffected by the global stock market volatility.

Meanwhile banks in Australia, Canada and Brazil also maintained their interest rates, for fear of upsetting the global financial market and causing further unrest in the global finance sector.

With the US sub-prime sector yet again causing problems for liquidity at lending institutions, central banks across the world have maintained interest rates in order to prevent any further volatility in trading, in what has been described as a ‘wait and see’ measure.

Inflation within the Eurozone had been down to 1.8%, within the European Central Bank’s unofficial comfort zone, with growth slowing across most of the major European economies singularly, and the region as a whole.

Tags: ECB: European Central Bank News by stewart
No Comments »

Growth across the Eurozone has halved over the period March to June 2007, according to official figures today, citing weaker corporate investment as the pivotal factor in the downturn.

The figures released today show a growth in the 13-nation Eurozone of 2.5% over the period on the year, which can be simplified to growth of 0.3% from last quarter.

The slowdown had been widely anticipated by analysts, off the back of widespread reports of falling investor confidence in Germany and France. With financial markets across the world in turmoil, and stock exchanges trading delicately even now, it is no surprise that corporate investment was down over the last quarter, prompting this slowdown.

The first quarter of 2007 saw the regional economy grow by 0.7%, before today’s growth of just 0.3%, which analysts predict is merely a temporary side effect of the world economic climate.

With stock markets now fitting back into some form of normal trading pattern, it could be proposed that investment should naturally return over the course of the coming months.

Investment in business throughout the Eurozone was down by 0.2% over the period after growth of 2% over the course of the first quarter. However, with markets across Europe affected by the fallout from the US economy, it’s understandable that economic growth should take a back seat.

Meanwhile, the European Central Bank is scheduled to meet this Thursday to discuss interest rate policy. With current market conditions, today’s announcement is set to further cement holding rates for the time being, to allow markets to settle down from the effects of macro-economic externalities.

In separate figures, the Eurozone economy benefited from strong exports in manufacturing and services, whilst imports remained modest through the majority of sectors, with internal EU trade accounting for domestic consumption.

Tags: ECB: European Central Bank News, European Economy News by stewart
No Comments »

Inflation across the Eurozone has been recorded as falling over the month of July, according to official regional figures released today.

Price rises across the 13-strong Eurozone region were down on last month’s figures, according to the Eurostat report released early this morning.

From 1.9% in June, inflation fell to 1.8% through July, remaining within the European Central Bank’s guideline rate of 2%.

Amongst some of the most significant contributors to inflation were tobacco and alcohol and leisure sectors, which continue to support much of the price rises across the Eurozone month on month.

Despite today’s news, analysts have still widely predicted the European Central Bank will raise interest rates by a quarter of a percent when they next meet in early September.

However, with poor growth figures released from three of the major economies in the region over the last week, a further interest rate rise may even further suppress the regeneration effort.

With ongoing fears of a lack of credit availability on a global level, spawned largely from the US sub-prime lending sector, the European Central Bank last week joined the Federal Reserve and the Bank of Japan in offering cash aid to rescue their respective finance and lending industries.

However, many analysts have claimed the move of the European Central Bank in injecting liquidity into finance and considering raising interest rates simultaneously is contradictory, calling for flexibility and sensibility to prevail when the bank meets to decide its interest rate policy next month.

“It’s a crazy situation of a central bank raising rates and at the same time adding liquidity into the system. What is the message the central bank is putting across by doing that?”

The news is expected to have some impact on trading across European markets over the course of the morning.

Tags: Interest Rates News, ECB: European Central Bank News by stewart
No Comments »

The European Central Bank has today announced further measures to help redress the credit shortage in Eurozone lending.

The package unveiled today, totalling an additional 48 billion euros, is designed to add to last week’s 95 billion euro pledge to banks and lenders across the thirteen Eurozone countries.

Analysts had forecast dire consequences arising from a global credit shortage, including an indication that a global recession may be the result of an international credit crunch.

After ongoing reverberations from the US sub-prime lending market, and further warnings of a looming credit crunch, the European Central Bank’s decision to offer further support to finance sectors comes on a day in which both Japan and the US have also agreed further intervention was necessary to prevent a global credit crisis.

Markets across the world were hit badly towards the end of last week after the European Central Bank took the initiative and was the first central monetary authority to propose a remedial package to help struggling banks and mortgage lenders maintain liquidity.

However, today’s move has been taken as more of a reassurance for markets, which closed strongly up on last week’s figures after reinvigorated investors took to buying up bargain-priced shares.

Only last month, the Governor of the Bank of England Mervyn King expressed his view that the US sub-prime lending market had not yet caused a global crisis.

After last week’s widespread credit crunch paranoia, it appears that the true effect of the sub-prime situation may be closer to global catastrophe than the Bank of England had at first envisaged.

While the additional support is welcomed, many analysts fear that the continuing problem in the US mortgage lending market will haunt banks across the world until a suitable resolution is found for the long term.

Tags: ECB: European Central Bank News by stewart
No Comments »

The European Central Bank today announced a substantial cash injection to support the potential crisis in lending across Europe, which could lead to a credit crunch and economic recession.

Banks across Europe have increased the cost of inter-bank borrowing, representing the increasing risk and lack of liquidity within the financial industry.

The aid package was announced today to the tune of 95 billion euros, in support of banks and mortgage lenders facing liquidity problems, and is designed to inject new life into Euro zone lending to prevent credit and liquidity issues over the coming weeks.

The European Central Bank will introduce the aid as a cash investment, making it the biggest intervention in financial markets by the central bank since after 9/11 six years ago.

With the threat of a worldwide credit crunch, business growth and expansion may be at risk without the finance to back it up, which could in turn stint economic growth and potentially lead to recession on a worldwide scale.

As a result, markets across Europe and the US closed significantly down over the course of today, with fears of a worsening global economic climate over the coming few weeks.

After a week of recovery in European shares, the news was taken as a serious indicator of things to come, and prompted a major sell-off throughout the second half of the day.

In the US, the Federal Reserve is also rumoured to be considering a similar aid package to help financial institutions hit by the US sub-prime lending scandal, in a bid to aid economic recovery in the region.

Despite the US intervention, thought to be in the region of $24 billion, President Bush has tried to alleviate market worries by anticipating a ’soft landing’ for markets across the globe.

Tags: ECB: European Central Bank News, European Economy News by stewart
No Comments »

The European Central Bank has today announced maintained interest rates at 4% across the Eurozone, for the second consecutive month.

The European Central Bank, responsible for economic policy across the thirteen eurozone nations, announced today its decision to maintain interest rates at the level set last month.

Interest rates throughout Europe have grown steadily over the last two years, leading to suppressed economic growth and business expansion.

However, slowing growth and receding inflation over the last month may be behind the decision from the ECB today in leaving rates untouched after the decision to settle at 4% over a month ago.

The news is set to be taken well by markets across Europe, as a relief for business and homeowners alike after consistent rises in recent months leading to increased borrowing costs across the eurozone.

Markets across Europe have been struggling over the last few weeks, after poor trading in the US, and the feared impact of growing interest rates on business and company performance.

But the ECB have maintained monitoring inflation is high on their list of priorities, promising to tackle any perceived risk head on in order to prevent uncontrollable price rises.

The euro has remained consistent against the dollar, which has led to poor eurozone exports through increased pricing.

Fears of a further strengthening of the currency were today forgotten, as the interest rate decision remained within the boundaries of analyst predictions.

The Bank of England also announced no change in interest rates today, as predicted by analysts earlier in the week. The news would suggest that the interest rate decisions of the last few months are taking their effect in curbing inflation and consumer spending, despite analyst forecasts of impending further rises throughout the second half of this year.

Tags: ECB: European Central Bank News by stewart
No Comments »

According to European Central Bank president Jean-Claude Trichet, recent upheaval in global markets will have little lasting impact on economic growth. He called what went on in the markets a “correction” and said that it would not lead to a correction in “the real economy”. Mr. Trichet also said that the recent events served a useful purpose in reminding all involved that there are inherent risks in all markets. He implied that perhaps that reminder was needed in an environment where the willingness to take risks has been at a high level recently.

The financial community could give Mr. Trichet’s remarks considerable credibility on the grounds that remarks he made at the Davos summit in January could be seen as predicting the recent declines in the markets. He said then that he saw global financial conditions as “unstable” and that a correction could be coming up.

Mr. Trichet’s remarks show that he remains optimistic about the global economy, including the US economy. He has endorsed current Federal Reserve chairman Ben Bernanke’s upbeat take on the economy in the US rather than former chairman Alan Greenspan’s recent remarks indicating that he sees a possible US recession coming up.

Tags: ECB: European Central Bank News, European Economy News by Brian Turner
1 Comment »

The European Central Bank lived up to expectations on Thursday when it lifted Eurozone interest rates by 25 basis points to 3.75 percent. Most analysts were sure that the rate would go up after the ECB’s president, Jean-Claude Trichet, said after last month’s meeting that the Bank would exercise “strong vigilance” in fighting inflation. Those words have come to be seen as Mr. Trichet’s code for “expect a rate hike next month” among analysts.

More rate increases are expected in the future as core inflation is likely to rise and wages go up. One German union is currently demanding wage hikes of 6.5 percent at the least. In addition, the money supply has continued to rise in the Eurozone. It was up by 9.8 percent in January over the same period last year and its growth increased faster in December and January than it has since early in 1990.

Probably playing into the decision from the ECB to raise rates was new data showing that the Eurozone economy grew by 0.9 percent in the last quarter of 2006 for full-year gross domestic product growth of 2.7 percent.

Tags: Interest Rates News, ECB: European Central Bank News by Brian Turner
No Comments »

New data shows that inflation grew by 1.8 percent in February over the same period last year. The growth was slightly less than the 1.9 percent that had been expected and remained below the 2 percent inflation ceiling set by the European Central Bank. Even though the inflation rate remains below where the ECB wants it to be, most analysts remain convinced that the Bank will issue another interest rate hike when it meets in March. A few analysts, on the other hand, believe that the Bank will wait until summer to raise rates again.

In a separate report, the purchasing managers’ index supported the inflation report, by showing that the Eurozone manufacturing sector is still growing. The index rose to 55.6 in February, up slightly from its January level of 55.5, but a bit lower than the 55.8 reading that had been expected. Any reading above 50 shows expansion in the sector. Growth in the index was helped by gains in France and Italy that more than compensated for a decline in Germany that was likely due to a hike in the value added tax there from January 1.

Tags: Interest Rates News, ECB: European Central Bank News, European Economy News by Brian Turner
No Comments »

Differences in growth in various Eurozone member nation economies has led to differences over whether or not the European Central Bank is supporting growth, or is not supporting all member nations equally. New data indicates that while Germany’s industrial sector is continuing to recover, Italian and French manufacturers are seeing slowdowns. The mixed results have resulted in a region-wide slowdown in growth that dropped the Eurozone purchasing managers’ index to 55.5 in January, down from 56.5 in December.

This continuing difference in performance in different parts of the region raises the question of whether the benefits of belonging to the monetary union were reaching all member nations evenly. The French PMI was at 52.4 in January after being at 54.2 in December, its lowest level in almost a year. Meanwhile, the Italian PMI was down from 55.0 in December to 53.5 in January, its lowest level in a full year.

While the major candidates for president in France’s upcoming election are using the figures to accuse the ECB of not supporting growth, the ECB characterizes the differences in economic growth between Eurozone nations as not that different from the differences between US states and considers regional differences to be unavoidable as it focuses more on the possibility of inflation. With output prices up last much at their fastest pace since they began to be monitored in 2002, it is seen as likely that the ECB be raising interest rates yet again.

Tags: ECB: European Central Bank News, European Economy News, European Union News by Brian Turner
No Comments »