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Re: ECB "Inflation could explode" !
What's with "could"????Originally posted by Mega View Post
Good thing Trichet is French; otherwise Sarko would already have his head. The fear of the ECB being run by another German will stay Sarko's hand. That is the reason Trichet knows he's untouchable. :p...In his bluntest signal yet that the ECB will defy political pressure, led by President Sarkozy of France, for it to hold fire, Mr Trichet said: “If we are not resolute, there is a risk that inflation will explode. If we act decisively, then we can master the situation.” ...
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Re: ECB "Inflation could explode" !
Originally posted by Mega View Post
According to MSM we are to believe...
"...one interest-rate increase may be enough to control inflation...25 basis points? Sure it will...:rolleyes:
Euro Falls as Trichet Signals One Rate Increase May Be Enough
By Ye Xie and Bo Nielsen
July 3 (Bloomberg) -- The euro fell the most against the dollar in more than three weeks as European Central Bank President Jean-Claude Trichet said he has ``no bias,'' signaling one interest-rate increase may be enough to control inflation.
The ECB raised its main refinancing rate by a quarter- percentage point to 4.25 percent, the highest level since 2001. Trichet said he has ``no pre-commitment'' and that today's increase will help bring inflation back below 2 percent.
``Trichet obviously disappointed market expectations,'' said Samarjit Shankar, director of global strategy for the foreign-exchange group in Boston at Bank of New York Mellon, the world's largest custodial bank, with about $23 trillion in assets under custody. ``He wants to start with a clean slate, and that has taken away a lot of expectations of further rate hikes.''
The euro dropped 0.8 percent to $1.5758 at 9:24 a.m. in New York, from $1.5882 yesterday. It rose to the all-time high of $1.6019 on April 22. The dollar increased 0.9 percent to 106.84 yen, from 105.91. The euro traded at 168.38 yen, compared with 168.20 yesterday.
``Starting from here, I have no bias,'' Trichet said at a press conference in Frankfurt. ``We have no pre- commitment. We do what is necessary to ensure price stability.''
Economic growth may weaken to 1.5 percent next year from 1.8 percent this year and 2.6 percent in 2007, according to ECB staff.
``The key phrase is he has `no bias,''' said Robert Sinche, head of global currency strategy at Bank of America Corp. in New York. ``The ECB is done for now.''
ECB Decision
Policy makers raised their target lending rate after holding it at 4 percent for more than a year. The decision was forecast by 57 of 58 economists surveyed by Bloomberg News.
When Trichet signaled after the June 5 policy meeting that an interest-rate increase this month was ``possible,'' the dollar fell 1 percent against the euro.
French President Nicolas Sarkozy, who has criticized Trichet for not following the Fed's example of cutting interest rates, said last week on France 3 television that the ECB ``should ask itself the question about economic growth in Europe and not only inflation.''
The yield advantage of two-year German bunds over comparable-maturity Treasury notes decreased to 1.92 percentage points, making the European securities less attractive to investors.
U.S. payrolls fell by 62,000 last month, following a decline of 62,000 in May, the Labor Department said today in Washington. The median forecast of 81 economists surveyed by Bloomberg News was for a reduction of 60,000.
May Report
The dollar weakened 1.2 percent against the euro and 1 percent versus the yen on June 6, when the government reported that the U.S. shed jobs in May.
Futures on the Chicago Board of Trade showed a 20 percent chance the Fed will increase its target rate for overnight lending between banks by a quarter-percentage point at its Aug. 5 meeting, compared with 25 percent odds a week earlier.
The U.S. currency dropped 1.2 percent against the euro last week in its second consecutive weekly loss after the Fed gave no indication on June 25 that it will start reversing the most aggressive series of cuts in two decades. The central bank held the fed funds target steady, saying in its statement that ``uncertainty'' about the inflation outlook remains high.
President George W. Bush said yesterday at the White House that ``we're strong-dollar people'' before leaders of the Group of Eight begin a three-day summit in Toyako, Japan, on July 7. Fed Chairman Ben S. Bernanke said in early June that he's ``attentive'' to the effect of the dollar's decline on inflation.
The dollar has lost 12 percent since the Fed made the first of seven reductions in the target lending rate from 5.25 percent in September.
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Re: ECB "Inflation could explode" !
Is the same hike Guillermo Ortiz et company posted for Banxico rates on the 20th, just that here they went from 7.5 % to 7.75 % Along with the daily auction of reserves (not much really, 32 million USD workdays from May 2nd to Jul 31st) and the "corto" that is already no longer announced.
Weren't for the enormous growth of circulating money, we would think we are in uncharted territory...
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