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发帖数: 8131 | 1 FRANKFURT (MarketWatch) -- The European Central Bank decided on Thursday to
keep its key lending rate unchanged at a record low 1%, as expected.
Attention now turns to ECB President Jean-Claude Trichet's monthly news
conference at 2:30 p.m. Frankfurt time, or 8:30 a.m. Eastern.
The euro /quotes/comstock/21o!x:seurusd (EURUSD 1.2803, +0.0004, +0.0313%)
showed little movement versus the dollar in the wake of the announcement and
remained up 0.2% on the day at $1.2821.
Trichet is widely expected to confirm that the central bank plans to
continue offering a range of special liquidity measures to commercial banks
through the end of the year. That means the ECB would continue to
effectively meet all demand for collateralized fixed-rate three-month loans
and other short-term lending facilities.
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Stock markets have had a stellar run over the last few days, but it could
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puts in the FTSE 100 on fears of a double-dip, says a London -based options
trader.
"Will the ECB prolong full allotment? We are pretty confident that they will
- at least until the end of the year," said economists at Danske Bank in a
note.
"Financial markets are fragile and there is no good reason to 'rock the boat
' before end-Q3 and before year-end, when liquidity tends to becomes more
scarce," they wrote.
The ECB chief had previously said the issue would be discussed at the
September meeting, but the governing council was seen as likely to extend
the liquidity operations after German Bundesbank President Axel Weber, a
member of the council, said last month that the ECB was likely to wait until
the first quarter of next year to discuss ending the measures.
Trichet last month said the euro-zone economy would show strong second-
quarter growth but warned that activity would be more moderate in the second
half of the year. Subsequent second-quarter data showed euro-zone GDP
expanded 1% compared to the second quarter.
The ECB will release its updated staff projections. ECB staff are expected
to boost their forecast for 2010 growth.
The forecast is likely to see growth of closer to 1.5% this year, up from
the 1% midpoint seen in the staff's earlier estimate, said Jonathan Loynes,
chief European economist at Capital Economics. A forecast for 2011 growth of
around 1.2%, however, may even be revised down, he said.
"Against this background, the bank will continue to proceed very cautiously
in removing its policy support for the region," Loynes said. "Although the
ECB's bond-buying program has ground to something of a halt in recent weeks,
the new calendar for lending operations beyond this month should confirm
that unlimited three- month funds at the repo rate will be offered until the
end of this year at least."
Trichet will be watched to gauge the depth of his concern about a potential
slowdown in the United States and the rest of the global economy. Euro-zone
growth was driven in large part by a 2.2% quarterly jump in German GDP,
fueled by strong industrial production and exports.
Purchasing managers index readings for the euro-zone manufacturing sector
showed the pace of growth has slowed so far in the third quarter but remains
on track for a strong performance.
Earlier Thursday, Sweden's central bank hiked its key repo rate by 0.25
percentage point to 0.75%.
The increase was in line with market expectations. The Swedish economy is
continuing to show strong growth, while inflationary pressures are currently
low, but are expected to increase as economic activity strengthens, the
central bank said in a statement.
"The repo rate needs to be raised gradually towards more normal levels to
attain the inflation target of 2% and create the right conditions for stable
growth in the real economy," the central bank also said. |
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