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Ecb Holds Rates, Tipped To Extend Liquidity Lifeline

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http://uk.reuters.com/article/idUKTRE68115120100902

The European Central Bank held interest rates at a record low on Thursday and is expected to keep its liquidity safety-net for banks in place as well amid a lopsided recovery and worries about vulnerable banks.

All 78 economists in a Reuters poll predicted the ECB would leave rates at 1 percent for the 16th month in a row and the median expectation is for no change until the fourth quarter of 2011.

Analysts also expect the ECB's 22-member Governing Council to keep lending banks unlimited funds until early next year, maintaining the lifeline relied on by banks in countries like Spain, Ireland and Greece.

Borrowing from the ECB by banks in these countries has hit record highs in recent months even though total lending has fallen about a third since July, highlighting the difficulties still faced by some institutions.

Ratings agency Standard & Poor's cut Ireland's credit rating last week to AA- on the back of an upward revision to the country's banking crisis bill.

The 10-year Irish/German government bond yield spread has hit record highs and spreads on other peripheral government bonds have also jumped over the last month amid growing evidence of a split between core euro countries and those on the periphery.

Germany grew at its fastest rate since reunification in the second quarter and more than twice as fast as the euro zone average, confirmed at 1.0 percent on Thursday. Greece is still in recession and Portugal and Spain managed just a tenth of Germany's growth rate.

Analysts said the fragile situation in markets and the uneven recovery meant the ECB, like other central banks, would have to tread carefully in pulling back support measures.

ECB President Jean-Claude Trichet will announce the decision on liquidity supply at his 1:30 p.m. British time news conference but most see an extension as a done deal given even German arch-hawk Axel Weber said it would be wise to keep borrowing uncapped.

"We expect that at this stage the ECB will choose the path of containing systemic risk in the banking system by providing unlimited cheap leverage beyond the year-end rather than by looking to lift the value of bank assets through direct market interventions," Tullett Prebon economist Lena Komileva said.

Unlimited cheap leverage, clearly this is a fool proof plan that cannot possible go wrong.

Borrow cheap and bet on currencies?

Wow all 78 "experts" got this one right. I suppose if you keep guessing at some point you'll be correct.

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http://uk.reuters.com/article/idUKTRE68115120100902

Unlimited cheap leverage, clearly this is a fool proof plan that cannot possible go wrong.

Borrow cheap and bet on currencies?

Wow all 78 "experts" got this one right. I suppose if you keep guessing at some point you'll be correct.

that lifeline

can it be used as a rope

only kidding

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  • 246 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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