Friday, 6 August 2010

BoE and ECB leave rates unchanged

The Bank of England left interest rates unchanged on Thursday.

So did the European Central Bank. From Bloomberg:

European Central Bank President Jean- Claude Trichet said Europe is recovering faster than forecast and money markets are improving, paving the way for the ECB to phase out liquidity tools used to fight the financial crisis.

“The available data for the third quarter are better than expected,” Trichet told reporters in Frankfurt today after the ECB’s Governing Council kept its benchmark rate at a record low of 1 percent. “The market is functioning a little bit better.” The ECB’s main rate is still “appropriate,” he said, indicating officials see no immediate need to tighten policy.

Much of the better-than-expected data that Trichet mentioned have come from Germany and Thursday brought more such data. Again from Bloomberg:

German factory orders surged more than twice as much as economists forecast in June as the global recovery gathered strength and European companies increased investment.

Orders, adjusted for seasonal swings and inflation, rose 3.2 percent from May, when they dropped a revised 0.1 percent, the Economy Ministry in Berlin said today. Economists forecast a 1.4 percent gain after an initially reported 0.5 percent decline the previous month, according to the median of 23 estimates in a Bloomberg News survey. From a year earlier, orders climbed 24.6 percent, adjusted for working days.

In contrast, Thursday's US economic data turned out to be disappointing. From Bloomberg:

More Americans than projected filed applications for unemployment insurance last week, indicating firings remain elevated as the recovery moderated.

Initial jobless claims climbed by 19,000 to 479,000 in the week ended July 31, the most since April and exceeding the highest estimate of economists surveyed by Bloomberg News, Labor Department figures showed today in Washington. The number of people receiving unemployment benefits dropped, while those getting extended payments rose...

Retailers in the U.S. reported July sales gains that missed analysts’ estimates as consumers reduced spending before the back-to-school season.

Sales at 30 chains climbed 3 percent, less than the 3.2 percent average of analyst projections, Retail Metrics Inc. said. It marked the fourth straight month that sales have trailed estimates. J.C. Penney Co. sales fell 0.6 percent, short of expectations for a 3.5 percent gain.

1 comment:

TechSlice said...

Interest rates have been low for a while now. They are doing the job and don't need to be lowered any further.

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