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To: zonder who wrote (49862)	1/8/2004 12:37:06 PM
From: Lazarus_Long	Respond to of 57110

ECB leaves interest rates at 2% European Central Bank holds rates despite calls for lower borrowing costs to counter weak dollar. January 8, 2004: 8:18 AM EST FRANKFURT (Reuters) - The European Central Bank left interest rates unchanged Thursday as widely expected, defying calls that cheaper cash is needed to prevent a strong euro from hurting economic recovery. The ECB said its Governing Council had decided to keep the euro zone's key rate at 2.0 percent at its monthly monetary policy meeting. The strong euro gives the ECB more breathing space, as it saps inflation by lowering import prices. Most analysts in a Reuters poll had said the ECB would stay put this month and that it would wait until the second half of 2004 to raise rates. But calls are mounting for the ECB to lower borrowing costs. German Economy Minister Wolfgang Clement said that euro strength is a problem for the euro-zone economy and puts Germany's 2004 growth forecast at risk. Belgian Prime Minister Guy Verhofstadt and Germany's DIHK Association of Chambers of Commerce and Industry both have called for lower interest rates to help weaken the euro's exchange rate against the dollar. If the euro stays strong, the ECB may further delay tightening, or even consider lowering rates again, analysts say. ECB President Jean-Claude Trichet will hold a news conference later in the day to explain the decision to leave the minimum bid rate at the ECB's weekly refinancing auctions unchanged at the two percent record low. Financial markets will be eager to hear what Trichet says about the euro, which has gained some five percent against the dollar since December, hitting new life highs above $1.28 this week. So far, the ECB has declined to comment in detail on the rise, repeating its line that a strong and stable currency is in the interests of the euro zone. money.cnn.com

To: zonder who wrote (49862)	1/8/2004 12:47:39 PM
From: Lazarus_Long	Respond to of 57110

Is the euro too strong? We are close to the point where European officials will try to stem the euro's rise. January 8, 2004: 9:18 AM EST By Justin Lahart, CNN/Money Senior Writer NEW YORK (CNN/Money) - Have we got to the point where Europe starts crying uncle over the euro? The rise in the Continent's coin has almost certainly begun to sting. Up 20 percent against the dollar and a myriad of Asian currencies that are effectively linked to it over the past year, up 9 percent against Japan's yen, the euro's surge is making European companies less competitive against their global counterparts both at home and abroad. Bad news for a European economy whose recovery is still fragile. Although the euro's strength will certainly give succor to consumers, since it will keep prices down, companies will be loathe spend money on new projects. "[W]e are seriously worried about the negative consequences of the super-strong euro on capex in Europe," wrote Morgan Stanley's European economic team in a recent report. European policymakers are starting to grumble. Thursday it was European Union Trade Commissioner Pascal Lamy, who said the euro was getting close to an area where it might damage European competitiveness. The European Central Bank left Europe's key overnight rate at 2 percent Thursday and following its meeting its president, Jean-Claude Trichet, said the euro's rise would not hurt export growth. But a growing number of observers believe the ECB is going to have to act. Lehman Brothers economist Klaus Baader points out that the euro is 5 percent higher now than the level the ECB reckoned would prevail when it prepared its projections for 2004 back in December. Where until recently it looked like the ECB would be hiking rates this year, now it looks like a cut may be in order. Lehman's Baader thinks it will happen by March. Such a move would have big implications the world over. So far, Europe has stood idly by while the United States and Asia have worked overtime putting through reflationary economic policies that have pushed their currencies lower. If Europe jumps onto the reflationary bandwagon, the world economy is going to grow at an even quicker clip in 2004. And because everyone would be trying to keep their currency weak against everybody else's, other things -- gold, oil, copper, cotton -- would rise in price even more. money.cnn.com ========================================================= I think CNN wants you guys to raise rates.

To: zonder who wrote (49862)	1/8/2004 12:59:17 PM
From: X Y Zebra	Read Replies (4) \| Respond to of 57110

Still, we might not be far from the day when these Central Banks reach the conclusion that USD is too hot a potato to try to hold on its way down, and find better things to do with their reserve money. Such as.... Gold ? the Dinar ? maybe... or ? The Euro... I doubt it... Yen, not likely... Unless the US economy completely collapses, I do not see a viable alternative... with the exception of China, most currencies are basket cases, worse than the dollar... a case of dumb and dumber ? -g (in the land of the blind, the one eyed is king) And... A lower dollar may help many US corp to weather this re-adjusting period while the US figures out in which way they can "fit productively" under the current transformation of wealth (from West to East). After all, there is a lot of technology in which the US is leader. The Europeans are not helping their own case by not lowering rates, I suppose they are enjoying a stronger currency (as it is mentioned, in the article posted, easing inflation in their own economies by cheaper imports)... Stakes getting higher in this poker game.