European Central Bank announced in November 4th, for 1% of the benchmark interest rates unchanged, but did not give a clear timetable for further withdrawal stimulus. On the same day, the Bank of England Monetary Policy Committee announced its benchmark interest rate at historic low of 0.5% unchanged, while maintaining the quantitative easing policy, asset size of the 200 billion pounds to buy the same.
Slow down the pace of ECB exit
European Central Bank President Jean-Claude Trichet said at a news conference, “next month” to decide whether to take the new exit policy. Fed “rescue” action caused by the sharp appreciation of the euro, the ECB will undoubtedly become a top priority.
Early June of this year, the euro against the dollar is still a less than 1.20, 5 months, nearly 20% appreciation of the euro exchange rate. This is heavily dependent on exports of the European economy is undoubtedly a heavy blow to the euro zone economy is likely to stifle the fragile recovery.
Currently, the European Central Bank is still to commercial banks within the euro zone’s benchmark interest rate to 1% of the 3-month unlimited offer, 1 month and 1 cycle of the central bank borrowings. The European financial markets are gradually returning to normal, 3-month euro area inter-bank lending rate from 0.63% in March rose to 1.049 percent. If the European Central Bank continues to below the level of market interest rates provide unlimited loans, will undoubtedly interfere with normal inter-bank lending. In May the European Central Bank began to plan the acquisition of government bonds, but also did not change the bond investor worries about the individual countries. Such as Greece, Ireland, Portugal and other countries with the German ten-year bond spreads all the way up, is now close to 840 basis points, respectively, 500 basis points and 390 basis points.
ECB monetary policy, the first thing to consider their own 16-nation euro zone’s economic growth conditions and price levels. And the current slowdown in economic growth and rising inflation levels are also increasing the ECB monetary policy more difficult. In economic growth in the second quarter of positive data, the current pace of economic recovery in the euro zone is slowing. In addition, the euro-zone differences between countries increase economic growth, German companies reported third-quarter results mostly positive data, while Greece, Ireland, Portugal, debt, economic growth near zero or even negative growth. Between countries, “the strong stronger and the weak weaker,” the situation has not changed. Shadow of inflation re-hit. October, 16-country euro zone has reached the price level rose by 1.9%, which is the highest inflation in two years from the ECB’s 2% inflation level of control one step.
Can be expected in the coming months, although still not the ECB to raise interest rates policy, but the pace of the emergency exit policy will continue.
British central bank kept monetary policy unchanged
UK third quarter of 2010 GDP growth of 0.8%, much higher than expected, the data cooled the market for the Bank of England is expected to increase economic stimulus measures. Analysts generally expect that in the year 2010, the Bank of England will not follow the Fed expanded the scale of quantitative easing policy.
Days of the British asset management company analyst Philip Shaw said: “In the future, further relaxation of monetary policy in the UK than the U.S. as high as possible. Compared with the previous months, the downside risks to the UK economy has been significantly reduced.” Japan Japanese Capital Markets economist in London, former British Treasury official Mehta said: “The economic situation of different United States and Britain, the British economic growth faster than expected, and high inflation, the central bank to continue to expand the lower the possibility of quantitative easing.”
However, some analysts believe that the UK economic outlook remains uncertain, massive government spending cuts will restrain economic growth in 2011. English law laying a senior economist at consulting firm Teng Gordon expects the Bank of England may be in February 2011 announced the expansion of quantitative easing policy.
In contrast, analysts are expected Bank of England to change interest rates more uniform. Over the past 50 months, 41 months UK inflation rate is higher than the Bank of England’s inflation target of 2% in the past nine months, the country’s inflation rate than the 2% target at least 1 percentage point higher.
Analysts expect Bank of Ireland, the United Kingdom in 2010, the year the central bank may keep rates unchanged, and the timing of the first rate hike in May 2011.
Bank of England kept its monetary policy unchanged, remove market doubts, sterling rose to stimulate, 4 pound mark against the dollar break through 1.6200, the highest 10-month high. As of 22:00 GMT, the pound against the dollar rose 1.20% to 1.6274.
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