Friday, 3 April 2009

ECB cuts rates as data show economic contraction moderating

The ECB cut rates on Thursday, but not by as much as expected. Bloomberg reports:

The Frankfurt-based ECB lowered its benchmark rate by a quarter-point to 1.25 percent, less than the half-point reduction expected by 49 of 55 economists in a Bloomberg survey. President Jean-Claude Trichet indicated the bank may lower the rate further next month, when he said it will also decide on any new “non-standard measures.”

But perhaps the need for monetary stimulus in the global economy is starting to ease.

In the UK, construction activity shrank at a slower rate in March. Reuters reports:

The Chartered Institute of Purchasing and Supply/Markit construction PMI index nudged up to 30.9 in March, compared to February's series low of 27.8 in February.

And UK house prices actually rose, according to another Reuters report.

The Nationwide Building Society said house prices rose 0.9 percent on the month in March after a 1.9 percent drop in February, and a separate survey by the Bank of England showed lenders were becoming more willing to extend credit.

And although US employment is still deteriorating, other indicators are showing improvement. From Bloomberg:

Initial jobless claims swelled by 12,000 to 669,000 in the week ended March 28, the most since 1982, the Labor Department said today in Washington. A Commerce Department report showed orders to factories improved in February for the first time in seven months.

Nevertheless, G20 leaders remain concerned enough to agree to more action to mend the global economy. Reuters reports:

World leaders clinched a $1.1 trillion deal on Thursday to combat the worst economic crisis since the Great Depression and said financial rules would be tightened to stop it happening again.

No comments:

Post a comment