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ECB will probably have to stick to the 1% rate for a long time

By FXstreet.com,  August 30, 2010, 07:54:00 AM EDT

FXstreet.com (Barcelona) - The ECB monetary policy council led by Jean-claude Trichet is meeting on Thursday to assess the status of the economic recovery and accordingly set a decision on benchmark rates. The Central Bank is also expected to decided whether to roll over monetary easing policies, basically tenders in all their conceptions.

Triffany Hammond, founder of TrifFx, has a set view on some of the European economies chances of standing alone: "The fact that many of the Union's struggling economies have run out of lenders and are relying almost exclusively on the ECB for money supply it may be a very long time before the E.U. can reasonably tighten money policy."

Recent indicators have laid out the groundwork for the council's most likely decision to keep feeding hard currency into the economy, as Hammond explains: "Recent decreases in Retail Sales as well as Wholesale and Producer prices indicate that the ECB is facing some deflationary pressures that may sway the conversation toward continuation of the quantitative easing measures rather than moving away from them."




The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.


This article appears in: Investing, Forex and Currencies

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