Forex Blog: Currency Trading News & Analysis.

June 21st 2005

ECB may finally cut interest rates

In response to signs its economy may be slowing, Sweden’s Central Bank lowered domestic interest rates to 1.5%, which is a record for the small Scandinavian nation. Sweden is one of several European countries, not on the Euro, that recently cut rates. The move may provide impetus for the European Central Bank (ECB) to do the same. Economists and high-ranking EU officials have been publicly urging the ECB to cut rates, as the largest European economies collectively stagnate. Nonetheless, the president of the ECB has repeatedly ruled out the possibility of rate cuts, arguing current rates are neutral, given inflation and growth levels. Meanwhile, uncertainty over the future of the EU abounds. Several prominent investment banks are forecasting a period of continued decline for the Euro. Goldman Sachs, for example, has set a year-end target of $1.10 for the Euro. The Financial Times reports:

It was the euro that bore the brunt of the bearish sentiment, suffering from “guilt by loose association…” The euro “remains acutely sensitive to indications the ECB might cut rates,” added Mr Mohi-uddin. 

Read More: Euro slides further on rate cut talk

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Posted by Adam Kritzer | in Central Banks, Euro | No Comments »

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