Interest Rates To Stay Put!
Updated : Nov 5, 2009
Now for some rather boring yet good news!
European Central Bank policymakers are shifting into 'post-crisis mode' but will keep the euro zone's key interest rate at a record low of 1% when they meet in Frankfurt later today, analysts predict.
A rate hike will wait backstage as a strong euro, worsening labour market and potential credit squeeze continue to lean against a budding euro zone economic recovery, they add.
Despite the headwinds, private sector business activity in the euro zone grew in October at its fastest rate since 2007, a survey showed earlier this week.
The purchasing managers' index (PMI) compiled by data and research group Markit, rose to 53 points from 51.1 points in September, confirming an earlier estimate. It had ended 14 months of decline in August.
On Tuesday, the European Commission hiked its euro zone growth forecast to 0.7% next year and 1.55 in 2011 having previously predicted a contraction of 0.1% in 2010.
However, unemployment is set to rise to 10.7% next year and 10.9% in 2011, the EU commission said.
The Bank of England is also expected to keep its key lending rate unchanged at a record low 0.5% in London today.
The US Federal Reserve after a two-day meeting in Washington said last night that it was sticking to its near zero interest rate policy and announced steps to wind down support for the ailing US economy.
Once central banks are sure that lending to households and businesses is back on track and that their economies are growing on a durable basis, they can begin to consider raising benchmark interest rates. Most analysts expect that to occur in the second half of 2010.
VHP Says BORING!!
Source www.rte.ie
