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Strategies & Market Trends : Currencies and the Global Capital Markets

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To: Henry Volquardsen who started this subject	1/18/2001 6:31:59 AM
From: friverola	of 3536

ECB´s Bi-Weekly Meeting Alert By Global Capital Investment, LLC fxstreet.com Please be advised of the following details concerning Thursday’s meeting of the Governing Council of the Eurosystem: Convenes: Thursday, 18 January 2001 Decision: Thursday, 18 January 2001 1245 GMT 0745 EST Press Conference: None scheduled Next Meeting: 1 February 2001 (press conference scheduled) GCI’s Comment: The Governing Council of the Eurosystem last tightened monetary policy on 5 October when it raised the minimum bid rate on refinancing agreements by 25bp to 4.75%. The European Central Bank has now raised interest rates by 225bp since November 1999 but it is highly likely that the central bank is at or near the end of its current tightening cycle. The interest rates on the marginal lending facility and deposit facility remain at 5.75% and 3.75%, respectively. The so-called first pillar of the ECB’s monetary policy pertains to growth in the broad M3 money supply – an indicator that consists of cash, short-term bank deposits, short-term securities, and debt instruments. The central bank sees a strong correlation between the amount of money in circulation and inflationary pressures. The ECB reached its decision to leave rates unchanged at the Governing Council Meeting held on 4 January 2001 partially because the three-month moving average of the annual growth rate of M3, covering the period from September to November 2000, declined to 5.1% from 5.4% in the period from August to October 2000. In its January Monthly Bulletin, the ECB concluded that "this dampening probably reflects the gradual increase in ECB interest rates since November 1999." Despite the fact that these data were above the 4.5% reference value the ECB deems compatible with price stability, they are unlikely to prompt the central bank into moving rates at present. fxstreet.com

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