ECB leaves rates steady
(3 September 2010 – Europe) The European Central Bank has held its main interest rate the record low of 1.0 percent earlier this week, as investors wait for eurozone growth forecasts and news of EBC funding measures for banks.
Economists are curious to find out if the central bank will extend unlimited loans, as the cost of borrowing for commercial banks locked at a record low for the 16th month running.
The central bank has been underpinning commercial banks by making massive amounts of cash available to keep money markets working smoothly and ensure credit is available to the wider economy.
Many analysts expect this to continue for the year.
A UniCredit analyst said in a research note, that Mr Trichet is expected to announce two/three more three-month liquidity operations with full allotment for the last quarter of this year.
Capital Economics analysts said that fears that weak growth and expensive banking support measures could push government debt in parts of the periphery up to astronomic levels.
In June, ECB staff forecast 2010 growth of 1.0 percent, followed by a 1.2 percent expansion in 2011.
Economists do not expect major changes to the previous inflation forecasts of 1.5 percent this year and 1.6 percent in 2011, both of which are well below the ECB target of just under 2.0 percent.
The central bank has been underpinning commercial banks by making massive amounts of cash available to keep money markets working smoothly and ensure credit is available to the wider economy.
Many analysts expect this to continue for the year.
A UniCredit analyst said in a research note, that Mr Trichet is expected to announce two/three more three-month liquidity operations with full allotment for the last quarter of this year.
Capital Economics analysts said that fears that weak growth and expensive banking support measures could push government debt in parts of the periphery up to astronomic levels.
In June, ECB staff forecast 2010 growth of 1.0 percent, followed by a 1.2 percent expansion in 2011.
Economists do not expect major changes to the previous inflation forecasts of 1.5 percent this year and 1.6 percent in 2011, both of which are well below the ECB target of just under 2.0 percent.
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