BoE and ECB hold, markets rally

The Federal Reserve may have launched another round of quantitative easing but the Bank of England appears to be keeping its powder dry. From Reuters:

The Bank of England added no more stimulus to the economy on Thursday after its November policy meeting, seeming to want evidence of a sharper economic slowdown before it considers the U.S. path of more quantitative easing.

Meanwhile, the ECB is even contemplating removing monetary stimulus. From Bloomberg:

European Central Bank President Jean- Claude Trichet signaled the bank intends to stick to its exit strategy even after the Federal Reserve eased policy further, sending the euro to a 10-month high, and tensions on Europe’s bond markets increased.

Policy makers will decide on possible further exit steps next month, Trichet said at a press conference in Frankfurt today after the ECB left its benchmark interest rate at a record low of 1 percent. “The non-standard measures are by definition temporary in nature,” he said.

A relatively resilient eurozone economy may be contributing to the ECB stance. Again from Bloomberg:

Europe’s services and manufacturing industries expanded at a faster pace than initially estimated in October, led by surging output in Germany.

A composite index based on a survey of euro-area purchasing managers in both industries slipped to 53.8 from 54.1 in the previous month, London-based Markit Economics said today. It had initially reported a drop to 53.4. A reading above 50 indicates expansion. A services gauge for the euro region fell to 53.3 from 54.1.

However, the Fed's decision on Wednesday proved sufficient for investors. From Reuters:

World stocks soared to highs last seen before Lehman Brothers' collapse in 2008 and the dollar fell sharply on Thursday on rising risk appetite in the afterglow of the Federal Reserve's asset buying plan...

Energy and commodity prices rose, with gold touching record highs as markets concluded the Fed's move to increase the supply of dollars would likely weigh the currency down further...

MSCI's all-country world stocks index rose 2.3 percent, taking the index to a level last seen before the collapse of investment bank Lehman Brothers in September 2008. MSCI's emerging market index gained 1.8 percent, its highest since July 2008.