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January 16th 2006

ECB leaves interest rates unchanged

At its most recent meeting, the European Central Bank (ECB) elected to maintain interest rates at current levels. While the lack of tightening shouldn’t come as a surprise to anyone, Euro bulls are surely reeling, as an increase in interest rates would have narrowed the differential between the EU and the rest of the world, and likely buoyed the Euro in the process. However, Jean Trichet, President of the ECB hinted towards the possibility of a rate hike at the bank’s next meeting, in March. He cited an economic turnaround in some of the EU’s largest economies, due to a surge in exports. The Wall Street Journal reports:

Recent data from the 12-nation euro-currency zone had confirmed the forecasts made by the ECB and national central banks, implying that a case for gradually tightening monetary policy remains. Many economists expect the ECB to raise rates gradually to 3% by the end of 2006.

Read More: ECB Suggests Rate Increase Is Still Possible

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

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