Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: LLCF who wrote (25150)	11/7/2002 11:17:58 PM
From: maceng2	Read Replies (3) \| Respond to of 74559

I would describe the ECB as "deer frozen in headlights of oncoming recession truck" news.ft.com as an aside. House prices up 18% news.bbc.co.uk average wage in UK £21,500 ECB holds rates but admits to divisions By Tony Major in Frankfurt and Scheherazade Daneshkhu in London Published: November 7 2002 21:43 \| Last Updated: November 7 2002 21:43 The European Central Bank decided to keep monetary policy unchanged on Thursday for the 12th successive month and took the unprecedented step of admitting to divisions within its policy-making council. It joined the Bank of England in refusing to follow the US Federal Reserve's unexpectedly big half-point cut on Wednesday. Wim Duisenberg, ECB president, made clear that the decision to hold its primary interest rate at 3.25 per cent had been far from straightforward, which suggested a long-awaited interest rate cut could come as soon as next month's meeting. Financial markets reacted with disappointment to the ECB's decision. In Frankfurt the Dax leading index of shares fell 4.7 per cent to 3,144. "The whole macro-economic picture for Germany has significantly worsened - people are not happy, they are saving and not investing," said Rolf Elgeti at Commerzbank in Frankfurt. The euro fell but later recovered near to an earlier three-month high against the dollar. Wall Street was weaker on worries about corporate earnings after the euphoria that followed the cut in rates by the Federal Reserve on Wednesday. The Dow Jones Industrial Average was off nearly 2 per cent at mid-session at 8,589. The FTSE 100 index in London slipped 22 to 4,081 after initially moving higher in anticipation of a cut in rates by the Bank of England. Euronext.liffe, a pan-European derivatives exchange, said it traded a record 2.5m contracts in London after the central banks' decisions. Mr Duisenberg said the 18-member ECB council had "extensive" discussion on a rate cut. "But in the end the view prevailed that it would be wise to keep interest rates unchanged." Economists said the ECB president's comments hinted at dissent in the wake of the Fed's cut. The ECB has been pressed by governments eager for a rate move to prop up the eurozone's economy. "The discussion must have been intense . . . one side prevailed but it must have been an almost split decision," said Luigo Buttiglione of Barclays Capital. Market hopes of a cut in coming weeks were bolstered by the overall doveish tone of Mr Duisenberg's statement. He made no mention of rates being "appropriate" and signalled concern about the eurozone economy. He described business confidence in the 12-nation bloc as "lacklustre". The pace of economic expansion was "hesitant" in the face of mounting uncertainty, fuelled largely by fears of a US-led invasion of Iraq. Economists said hopes of a rate cut had also been helped by eurozone finance ministers' recent pledge of support for the stability and growth pact, which obliges the m to achieve balanced budgets over the medium term. In the UK the Bank of England ushered in the longest period of unchanged rates for three decades after deciding to leave its main interest rate at 4 per cent for the 12th successive month. As usual the Bank gave no explanation for its decision, details of which will be published in a fortnight but fears of over-stimulating the buoyant household sector appear to have outweighed worries about global recovery.