Forex Blog: Currency Trading News & Analysis.

April 6th 2006

ECB: no rate hike in May

In the days and weeks leading up today’s meeting of the European Central Bank (ECB), the Euro had begun to gather steam as traders and analysts braced for the bank to signal a rate hike in May. Such a move would be a step towards reducing the differential between European and American interest rates. Jean-Claude Trichet, president of the ECB, had a different agenda, however, delicately warning investors not to expect such a rate hike. Analysts quickly reconfigured their models, hoping that the rate hike will merely be postponed by a month, rather than cancelled. The Financial Times reports:

Market expectations still point to rates of 3.25 per cent by the end of the year, but whereas this was a 100 per cent certainty before Mr. Trichet’s comments, the probability fell to 80 per cent afterwards.

Read More: Euro slips as Trichet douses May hike hopes

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

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