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February 15th 2006

ECB expected to move ahead with rate hike

Despite the continued lackluster performance of the EU’s largest economy, the European Central Bank (ECB) is still expected to raise interest rates next month, for the second time in over five years. Traders were undeterred by the release of economic data, which indicated Germany’s economy stalled over the last quarter and that investor confidence is sagging. Economists still expect the EU economy, as a whole, to grow by 2.3% this year, and further expect the ECB to move ahead with monetary tightening in order to keep pace with inflation. A narrowing interest rate differential between the EU and US will surely benefit the Euro in the short term. AFX News Limited reports:

One economist noted that the [German] economic sentiment indicator points to significant optimism in Germany, providing further evidence that the outlook is relatively bright. “There is nothing here to stop the ECB from raising rates in March,” she added.

Read More: Euro steady as market continues to price in ECB rate hike

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

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