ECB, BoE leaves interest rates unchanged

No surprise from either the ECB or BoE yesterday. From Bloomberg:

European Central Bank President Jean- Claude Trichet signaled the ECB will raise interest rates next month as the pace of economic growth threatens to fuel inflation.

"Strong vigilance remains of the essence so as to ensure that risks to price stability over the medium term do not materialize," Trichet said at a press conference in Frankfurt today. The bank left its benchmark rate at 3.5 percent, a level he referred to as "low."...

The Bank of England also left its key interest rate unchanged today, holding it at 5.25 percent. Investors are still betting on it reaching 5.5 percent by April, futures trading shows.

Other data yesterday cast doubts on whether interest rates have much further to rise.

In Germany, exports fell in December. Bloomberg reports:

Sales abroad, adjusted for working days and seasonal changes, fell 2 percent from November, when they dropped 0.6 percent, the Federal Statistics Office in Wiesbaden said today...

Imports rose 5 percent in December from the previous month, when they dropped 3.9 percent, today's report showed. The seasonally adjusted trade surplus narrowed to 14.4 billion euros ($18.8 billion) from 19.1 billion euros.

Meanwhile, UK house prices continued to rise in January. Reuters reports:

House prices rose 1.3 percent in January, according to the Halifax house price index, erasing a 0.9 percent fall in December.

But UK house price inflation may have peaked according to another Reuters report.

Median forecasts in a survey of 25 analysts carried out February 5-8 before the rate decision showed house price inflation at about 6 percent this year -- down from around 10 percent last year -- and then easing to just 3.5 percent in 2008.

An overwhelming majority of analysts -- 18 of 22 -- now say house price inflation has peaked. That compares with just 2 out of 32 analysts who said the British property market had peaked in a similar poll carried out just three months ago.

In the US, Reuters reports that the economic news was "generally upbeat".

...U.S. retailers said a blast of frigid weather and redemption of gift cards helped boost sales in January, with many retailers reporting sales above expectations.

According to the International Council of Shopping Centers, chain store sales rose a strong 3.7 percent in January from a year earlier, a pickup from December's 3.3 percent gain...

The Labor Department said 311,000 workers filed initial claims for state unemployment insurance aid last week, up only slightly from the 308,000 submitted a week earlier...

A separate report from the Commerce Department showed an unexpected fall in inventories at wholesalers in December.

The 0.5 percent decrease -- the biggest drop since May 2003 -- reflected slimmer auto and petroleum stocks and followed a 1.1 percent November gain...

Wholesalers reported a 1.8 percent increase in sales, capping a strong year...

The inventory-to-sales ratio, the number of months it would take to deplete existing stocks at the current sales pace, was 1.17 in December, down from 1.19 in November.