Thursday, Nov 02, 2006

As Expected - no rise by ECB today - wait for December and more ... beyond

BBC News: Eurozone rates held steady by ECB

ECB voted to keep eurozone interest rates on hold at 3.25% for November, a decision that was widely expected.
Analysts now expect the ECB will raise rates by one quarter of a percentage point in December.

Posted by sirgoogle @ 07:45 PM (378 views)
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5 Comments

1. Nohpc said...

Stupid question here? If Britain joined the Euro would it then use the eurozone rates or would it still be the Bank of England rates?
I'm not convinced there is going to be a relentless rise in rates in any of the developed nations. All the date looks like america's economy is really struggling now. ? deflation to come

Thursday, November 2, 2006 09:06PM Report Comment
 

2. harold said...

P*ss-poor decision by tricky Trichet.

Thursday, November 2, 2006 09:40PM Report Comment
 

3. sold 2 rent 1 said...

NoHPC,

If Britain joined the euro then it would use euro rates.
As any good teacher says, There is no such thing as a stupid question.
You have come quite close with this.

Personally, I think the eurozone will lose a few members during the next big recession. Italy is first on the list. Others at risk are Portugal, Spain, Greece, and Ireland.

I dont believe there will be a relentless rise in rates, initially. Central banks may be restricted on how far they can cut rates, when economies slow.

As we move towards 2010, this commodities secular bull run will pick up pace due to world economic expansion. World resources are being consumed on a massive scale. By 2010 we will see big rises inflation

As I said yesterday the world stock, property and commodity markets are increasingly looking like we were in the early 1970s. We have a big inflationary period ahead of us.

Friday, November 3, 2006 07:50AM Report Comment
 

4. sold 2 rent 1 said...

paolo88888,

You said in a previous thread, Whether one accepts the long-term cycle argument depends though on ignoring the affect on stocks and house prices, and interest rates, of the oil crisis.

The oil crisis of the 1970s probably will not be repeated.
The worlds appetite for consuming the worlds resources may have the same affect as the oil crisis.

The oil crisis was a sharp supply shock. What is happening now with commodities is a demand issue. The rise in inflation may take a while to play out, but the consequences may be equally as devastating.

IRs now dont have to reach 12% as in 1974 to cause real pain.
We are in so much debt that 6-8% will cause the same pain

We are pretty much at a crossroads now.

There are some people who are arguing that the stock market is still in its secular bull run since 1982 and the commodities market bull run is over.

If in the next month, the stock markets start heading south and the commodities up then there will be little doubt that stocks are in a secular bear with many years to run and commodities in a secular bull. This will spell disaster in the property market over the next few years.

Friday, November 3, 2006 08:44AM Report Comment
 

5. harold said...

"If in the next month, the stock markets start heading south and the commodities up then there will be little doubt that stocks are in a secular bear with many years to run and commodities in a secular bull."

There is little doubt that this is the likely scenario. However, rising commodity prices have as much to do with 'safe-haven' psychology, as they do with demand. Investors are frightened by US debt and the ramifications for the $. For some peculiar reason, however, the is at present seen as an attractive 'alternative' and investors are buying heavily on the FX market. This also tells us something about where the smart money thinks UK interest rates are heading - North.

Friday, November 3, 2006 05:37PM Report Comment
 

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