I don't understand some of this article......example: one quote, "the market is worried that the ECB may wait too long before cutting rates"....
I understand the threat to the currency due to inflation, but then NOT lowering rates would seem to think to do (to keep the currency strong)...so why would the Euro sell off because rates aren't being lowered? I don't get that....as Martin Short would say......"it isn't me.....it's him, right?" (obscure Saturday Night Live reference, circa 1984, Marty and Don Lufkin.....Hong Kong whoopee cushion/joke toy factory, in response to "faux" Mike Wallace, 60 minutes spoof)
Euro Declines Amid Concern Inflation Will Delay ECB Rate Cuts
By Chris Gothard
London, March 14 (Bloomberg) -- The euro fell to a two-week low against the dollar amid concern inflation in the euro region will deter the European Central Bank from cutting interest rates even as economic growth slows.
``The market is saying the ECB may wait too long before cutting rates,'' said Dorothea Huttanus, an economist at DG Bank in Frankfurt.
Reports yesterday showed prices in France and Germany rose while ECB council member and Bundesbank President Ernst Welteke told a German magazine the ECB should wait before cutting rates from their current 4.75 percent level because inflation still isn't under control. The bank's policy-setting panel meets tomorrow.
The euro fell as low as 90.98 U.S. cents, from 91.39 in London late yesterday. It has lost 1.3 percent against the U.S. currency so far this month. Against the yen, the euro was little changed at 109.72 compared with 109.59.
Currency prices showed little movement after German retail sales rose for the first time in nine months in January, to 2.5 percent from December.
``The market is probably saying that German retail sales were good, so the ECB won't cut rates soon enough, and that will stifle growth'' in the euro-zone, said Kamal Sharma, a currency strategist at Commerzbank AG. |
