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gruffydd

Eu Interest Rates To Rise

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Just arrived home and heard an RTE article on the inevitability of an interest rate hike in August.

http://www.bloomberg.com/apps/news?pid=206...&refer=home

And on another subject, has anybody noticed how jittery commentators have become over the strength of the housing market over the last week or so? V interesting

Edited by gruffydd

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From RTE.ie

ECB sends strong signal for August rate rise

July 06, 2006 14:50

The European Central Bank sent a strong signal today that it was planning to raise its key interest rates again next month after already raising them three times since December.

The ECB has raised its benchmark 'refi' refinancing rate three times since the end of last year, each time by a quarter of a percentage point, with the last move on June 8 bringing the key rate up to 2.75%.

The ECB held its key rates steady at its regular monthly policy-setting meeting in Frankfurt today.

But ECB chief Jean-Claude Trichet signalled a further tightening of monetary conditions in the single currency area as soon as next month at a news conference following today's decision.

First, Trichet said the ECB would exercise 'strong vigilance' with regard to the potential inflationary risks in the 12 countries that share the euro, using a term which the financial markets view as the bank's watchword for an imminent rate rise.

Secondly, the Frenchman announced that the ECB's rate-setting governing council is would meet in person on August 3, instead of via the planned teleconference.

'We have decided to meet physically on August 3, instead of via teleconference,' Trichet told today's news conference.

The ECB traditionally holds its August meeting on interest rates by means of a teleconference and without the usual press conference afterwards.

But this year, the governing council would convene in person in the bank's Eurotower headquarters and Trichet would give a news conference afterwards, suggesting that a further upward move in borrowing costs was imminent.

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The ECB might be pulling a Fukui--a lot of planning to raise rates but an economy to weak to do so.

The only economies strong enough for real rate hikes are the US and China. Its a wait and see--the hesitancy so far is, IMO, a reflection of weakness rather than strength.

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http://today.reuters.com/tv/videoStory.asp...db4a93589542802

Jul. 6 - The head of Macroeconomics for PricewaterhouseCoopers issues his assessment of the British economy.
John Hawksworth discusses the risk of a new ''wobble,'' why business sentiment is lagging and why he sees no immediate need for an interest rate rise.
Matt Cowan reports for Reuters.
FEATURED SPEAKER: John Hawksworth, PriceWaterhouse Coopers head of macroeconomics

The UK economy cannot take an IR hike. Its a knife-edge situation and my guess is that Gordon is waiting to see if history is going to repeat with another HPC. Once the weakness is realised in the marketplace we could see sterling at last start to reflect a sense of reality rather than a miraculous valuation based on never ending HPI-MEW. Then the rates will have to rise to defend the pound.

IMO its all about the pound right now and inflation is secondary because as goes the pound so goes inflation.

Trouble Septemberish?

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The ECB might be pulling a Fukui--a lot of planning to raise rates but an economy to weak to do so.

The only economies strong enough for real rate hikes are the US and China. Its a wait and see--the hesitancy so far is, IMO, a reflection of weakness rather than strength.

If betfair is a good indicator of the market and so far they have been a 0.25% increase is a dead cert. Check it out. http://www.betfair.com/

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The ECB might be pulling a Fukui--a lot of planning to raise rates but an economy to weak to do so.

The only economies strong enough for real rate hikes are the US and China. Its a wait and see--the hesitancy so far is, IMO, a reflection of weakness rather than strength.

PMI, business climate, credit and money growth, all put strong pressure on the ECB to raise rates.

BAnk credit analyst always has the best analysis.

http://www.bcaresearch.com/public/index.asp

PRE-20060706.GIF

The Pressure Is On The ECB

10:16:00, July 06, 2006

Strong cyclical economic momentum will keep the heat on the ECB in the near term.

Recent euro area economic data have been strong—today’s higher PMI for services follows last week’s jump in the business climate indicator to a 6-year high. The improvement in business conditions will reinforce the ECB’s desire to tighten—real short-term interest rates have risen only about 100 bps in the past year and are still low by historical standards. With money and credit growth well above ECB comfort levels, the pressure is on for policymakers to accelerate the pace of rate hikes. President Trichet has not prepared the markets for a 25 bps increase this week, so the ECB will likely wait until August. Given the momentum of the euro area economy, however, unless and until the U.S. data shows more weakness, market expectations of ECB rates will drift higher.

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  • 301 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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