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Trichet Flags April Ecb Rate Rise, Stuns Markets

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http://uk.reuters.com/article/2011/03/03/uk-ecb-rates-idUKTRE7222ZX20110303

The European Central Bank may hike interest rates next month, far earlier than markets expected, though any rise would not signal a series of increases, President Jean-Claude Trichet said on Thursday.

The strong indication that a rise will come in April shocked markets expecting a move late this year and put the ECB in pole position to hike well before the U.S. Federal Reserve and even the Bank of England, which analysts had expected to move first.

"The position of the Governing Council is that an increase in interest rates at the next meeting is possible," Trichet told a news conference after the central bank left rates at a record low 1.0 percent.

A firm majority of economists polled by Reuters after the news conference said the ECB would raise rates next month.

Trichet dismissed the idea that a rate rise in April could be bigger than 25 basis points, saying such a scenario was "not the appropriate interpretation."

The euro soared as Trichet spoke to as high as $1.3976, its strongest since November 8, putting it on track to test the psychologically important $1.40 level.

"He certainly went 90 percent of the way to announcing a hike to come in April and certainly caught the market by surprise," said Peter Schaffrik, strategist at RBC Capital Markets.

Game on if this happens, the implications for the PIIGS could be devastating.

The ECB moving to appease the Germans?

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Time for PIIGS to move to a fixed rate then. More interesting to see what effect this will have on Eire property meerkat.

And the £ :-)

Could we see some reverse currency wars? With everyone fighting to keep the currency strong to hold off the effects of surging oil.

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I saw a good post on this subject which pointed out that there is now a big gap between the rhetoric of the ECB and that of the Bank of England.

So some tough talk and it remains to be seen if this is translated into action. Later there was another section which to my mind will echo around the Threadneedle Street offices of the Bank of England.

It is paramount that the rise in HICP inflation does not lead to second-round effects and thereby give rise to broad-based inflationary pressures over the medium term. Inflation expectations over the medium to longer term must remain firmly anchored in line with the Governing Council’s aim of maintaining inflation rates below, but close to, 2% over the medium term.

It’s not that often that I agree with Mr.Trichet!So let’s enjoy the moment and on a more serious note he is expressing a view which is completely the opposite of the majority of his counterparts at the Bank of England….

http://t.co/vY8xPPn

Let's hope someone points this out to the Bank of England as I for one would like to see their reply...

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Could we see some reverse currency wars? With everyone fighting to keep the currency strong to hold off the effects of surging oil.

:lol:

Does that include the BOE & Sterling?

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Could we see some reverse currency wars? With everyone fighting to keep the currency strong to hold off the effects of surging oil.

Higher oil prices at this point means less consumption (of almost everything), more risk and higher unemployment.

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http://www.telegraph.co.uk/finance/economics/8360378/ECB-prepares-rate-rise-as-global-tide-turns.html

The ECB is the first of the big central banks to signal a rate rise to curb inflation, marking a major turning point in the global policy cycle.

"This is a shock," said Silvio Peruzzo from RBS. "This raises risks for the eurozone periphery through all kinds of channels. Most mortgages in Spain are on floating rates."

Santiago Carbó from Granada University said the shift was "very worrying" for Spain. "It catches us at a bad time: we haven't finished cleaning up the financial system."

Mr Trichet said the ECB aims to stop inflation psychology gaining a foothold, though he played down fears of a "series" of rate rises. As a concession, the ECB once again extended its unlimited 3-month liquidity for "addicted" Irish, Greek, and Iberian banks.

It would appear that some banks are only existing because of the ECB. More bailouts for the bankers please.

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Interesting to see if this is a bluff or not. I can't believe the ECB would raise rates with half the currency bloc deep in the mire. If anything this highlights the massive structural problem facing the €.

Germany and France are roaring, Spain, Portugal, Greece, Ireland are in or near recession with massive and rising unemployment. Italy is in the middle. What is going to happen to these countries if rates rise rapidly?

Not going to be pretty and if they do raise rates sharply I would expect the zone will begin to disintegrate.

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The ECB *is* the Germans. I thought everyone on here had sussed that.

not the Germans, just a pragmatic Banker deciding that a person actually paying the mortgage should have more say than one needing a loan.

Country savers loved, private savers raped.

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not the Germans, just a pragmatic Banker deciding that a person actually paying the mortgage should have more say than one needing a loan.

Country savers loved, private savers raped.

I'm not sure if I understood your post correctly, but if you think that it's the savers money that provides the mortgages, then you haven't understood how fractional reserve banking works.

The banksters don't give a shit about savers, they only care about their own profits (higher IRs = higher profits for them).

Edited by wise_eagle

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I'm not sure if I understood your post correctly, but if you think that it's the savers money that provides the mortgages, then you haven't understood how fractional reserve banking works.

The banksters don't give a shit about savers, they only care about their own profits (higher IRs = higher profits for them).

yeah, I was trying to say that a country that contributes is looked after, and the debtors go hang, whereas in the real world of you and I, its the reverse.

And we dont have fractional reserve banking based on deposits.

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Interesting to see if this is a bluff or not. I can't believe the ECB would raise rates with half the currency bloc deep in the mire. If anything this highlights the massive structural problem facing the €.

Germany and France are roaring, Spain, Portugal, Greece, Ireland are in or near recession with massive and rising unemployment. Italy is in the middle. What is going to happen to these countries if rates rise rapidly?

Not going to be pretty and if they do raise rates sharply I would expect the zone will begin to disintegrate.

I don't think France is doing all that great nowdays , have you seen their trade deficit figures lately?

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  • 311 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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