ECB Keeps Rates Unchanged As Trade-Weighted Euro Soars
As expected by most, the ECB just announced its three key interest rates unchanged, meaning the surge in the trade- weighted EUR will continue to weigh on European exports.
From the ECB:
7 February 2013 - Monetary policy decisions
At today’s meeting the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.75%, 1.50% and 0.00% respectively.
The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 2.30 p.m. CET today.
Today's lack of action by the ECB means that Europe's GDP will start seeing cuts as a result of a soaring trade-weighted EUR as noted below:
The euro has climbed 11 percent on a trade-weighted basis since Mario Dragi pledged on July 26 to do whatever it takes to preserve the currency. A 10 percent gain against a basket of trading partners reduces euro-area GDP by 0.5 percentage point in the first year, according to Elga Bartsch, chief European economist at Morgan Stanley in London
That's 0.5% the Eurozone can't afford to lose.
Nexd up: Drahi's press conference at 8:30am in which he resembles Greenspan in his meandering and meaningless rhetoric ever more.