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February 2nd 2006

ECB suggests rate hike

The European Central Bank met today to discuss the near-term future of European monetary policy. As analysts expected, the ECB left rates unchanged. The body also reinforced analysts’ expectations by hinting it would raise rates at its next meeting, which is scheduled to take place in March. In fact, credit markets have already priced in a 25 basis point rate hike at such a time. While Jean-Claude Trichet, president of the ECB, announced that the performance of Euro-zone economy supported a tightening of monetary policy, he cautioned pundits not to expect multiple rate hikes. Euro bulls are eagerly awaiting the rate hike, which represents a step towards narrowing the interest differential between the EU and the rest of the developed world. Forbes reports:

“The press conference has effectively endorsed the markets expectation for an interest rate rise at the March meeting, without giving further clues as to the likely progression of rates thereafter,” said a …senior FX strategist.

Read More: Euro steady after Trichet hints at March ECB rate hike

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

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