ECB expected to buy for time on rates

The European Central Bank is expected to leave rates on hold at 4.0 per cent Thursday in the face of renewed inflationary prices and fading economic growth. ( dpa )

But many analysts believe that the ECB will be forced to cut rates to 3.5 per cent by the end of the year in a bid to shore up economic confidence in the face of fears of a global slump triggered by the US housing market crisis.

Financial markets are expecting even deeper rate cuts with the ECB following the lead of the world's other major central banks, notably the US Federal Reserve, which has launched a series of bold steps towards slashing the cost of money in the world's biggest economy.

Eurozone interest rates have been on hold since June last year with the ECB forced to abandon plans to raise borrowing costs in September in the face of the global financial market turmoil unleashed by the upheaval in the American mortgage sector.

In the meantime, the euro's recent surge to an all-time high of more than 1.52 dollars has helped to give the ECB's 21-head rate-setting council some room to manoeuvre on rates with the currency's strength resulting in tighter monetary conditions in the eurozone.

But with annual inflation in the 15-member eurozone remaining stuck at 3.2 per cent in February, well above the ECB's 2.0 per cent target and the highest since the euro's launch in 1999, the Frankfurt-based bank is unlikely to move quickly to flag plans to begin trimming borrowing costs.

"It is difficult to see the ECB preparing for a rate cut soon," said Rainer Guntermann, senior economist with the Dresdner Kleinwort.

However, European finance ministers joined business leaders this week in expressing concern about the strength of the common currency amid worries that it could undercut the currency bloc's key export machine.

As a result, ECB chief Jean-Claude Trichet's press conference Thursday is likely to be closely watched by markets for hints as to how the bank's governing council is sizing both interest policy and the strength of the euro.

At his press conference, Trichet is also scheduled to release the bank's latest so-called staff projections on the inflation-and-growth outlook for the eurozone.

Aside from winding back economic growth forecasts for the eurozone, the staff projections are expected to point to inflation in the currency bloc coming in at above 2.0 per cent both this year and in 2009.

As part of the buildup to Thursday's ECB meeting, key data and surveys have been pointing to the eurozone growth rate slipping back a gear but with the currency bloc's economy avoiding a sharp contraction as a result of the slowing world economy.

Consequently, this is also expected to help the ECB to buy for time on interest rates.

The European Commission expects the eurozone economy to loose momentum this year and to grow by 1.8 per cent compared to 2.7 per cent in 2007.

"The bit question is what the staff projections will tell us about (the ECB's) monetary bias," said Klaus Baader, Merrill Lynch's London-based chief European economist.

Thursday's meeting of the ECB's governing council will also coincide with a decision by the Bank of England on borrowing costs.

But with the London-based central bank having delivered a series of rate cuts in recent months including a 25-basis points reduction in February, analysts are expecting the British monetary authorities to leave rates on hold at 5.25 per cent.

However, since cutting rates last month, the London-based monetary authorities' forecasts have pointed to higher energy and food costs resulting in inflation edging up above 3.0 per cent this year from 2.2 per cent in January. The UK central bank also has a 2.0-per-cent inflation target.

In addition, British interest rates are much more restrictive than those currently prevailing in the eurozone, which adds to the dilemma facing the Bank of England as it attempts to balance out the threats posed by falling growth and high inflation.

But unlike the ECB, the Bank of England's problems of dealing with rising consumer prices are being exacerbated by a weak pound which is helping to fuel inflationary pressures in Britain.

Azerbaijan’s import of goods from Italy down
Azerbaijan’s import of goods from Italy down
Georgia adopts new rule on forest use
Georgia adopts new rule on forest use
Russian Bright Way Group to set up pharmaceutical plant in North Kazakhstan
Russian Bright Way Group to set up pharmaceutical plant in North Kazakhstan
Loading Bars
Latest
Three rockets launched toward Israel from Lebanon, no damage -Israeli military
Africa's COVID-19 cases surpass 4.66 mln
Over 500 residential buildings razed by Israeli airstrikes in Gaza Strip
China's Qinghai donates anti-pandemic supplies to Kyrgyzstan
Georgian's commercial banks see increase in number of total loans
Azerbaijani, Russian FMs exchange views on tensions on Azerbaijani-Armenian border
Overseas election headquarters established at Iran’s foreign ministry
Sputnik V approved for use in Republic of Maldives
Azerbaijan shares data on number of vaccinated citizens for May 13
Azerbaijan confirms 509 more COVID-19 cases, 1,427 recoveries
COVID-19 cases decrease in 80 Turkish provinces in a week
Tajikistan delegation to visit Uzbekistan on May 14
Gaza death toll jumps to 84 as Israeli air raids intensify
Musk decries bitcoin's 'insane' energy use after Tesla payment U-turn
Azerbaijani president got touched by National leader Heydar Aliyev's words about Shusha (VIDEO)
Azerbaijani president once again says at Jidir Plain in Shusha - Karabakh is Azerbaijan! (VIDEO)
EU countries urged to halt non-essential travel from India
U.S. weekly jobless claims fall
Gaza flare-up further weakens shekel
Georgia increases aviation fuel imports
Iran ready to have closer ties with Saudi Arabia, FM says
Azerbaijan’s import of goods from Italy down
Iran talks insurance data in its mining sector
Turkish ministry discloses volume of cargo handled through Mersin port
Georgia adopts new rule on forest use
Kazakh Senate adopts document on economic relations with Kyrgyzstan, within EAEU
Volume of chemical products exported by Turkey to Azerbaijan disclosed
KazTransOil completes connecting newly constructed sections to Uzen-Atyrau-Samara pipeline
Trade ministry discloses volume of cereals imported by Kazakhstan from Turkey
Russian Bright Way Group to set up pharmaceutical plant in North Kazakhstan
Georgia sees decrease in amount of local small companies
Turkmenistan's Turkmennebit opens tender to purchase of chemical products
Kazakhstan's exports to Latvia decrease
Kazakhstan boosts agriculture goods output
A year ago, different music was played in Shusha, other actions were taking place here - President Aliyev
President Ilham Aliyev meets with journalists in Shusha
Georgia establishes its first avocado farm
Tender for park construction opens in Turkmenistan's Dashoguz region
Trade ministry discloses volume of cereals imported by Georgia from Turkey
Turkey’s export of steel to US soars
UNIDO talks current global projects in Kazakhstan
First VP Mehriban Aliyeva shares footage from gala concert of “Kharibulbul” music festival on her Instagram page (VIDEO)
Power transmission line of Turkmenistan's Mary State Power Plant ready for commissioning
Кazakh Electricity Grid Operating Company opens tender to buy construction materials
Turkmenistan intends to increase pace of oil production
SOCAR to operate exports of Rosneft’s oil products to Ukraine - sources
Trade ministry discloses volume of electrical goods exported by Turkey to Germany
Volume of electrical goods exported by Turkey to Russia disclosed
India Fastest In World To Administer 17 Crore Vaccine Doses In 114 Days: Centre
Azerbaijan’s import of goods from Germany down
Forex reserves surge by $32.29 bn in six months: RBI
How IAF, Navy have pressed transport planes, ships to bring Covid relief to India
India received $83 billion in remittances in 2020: World Bank report
American India Foundation raises $25 million for Covid-19 assistance to India
Vietnam Buddhist Sangha presents medical equipment to India
Lemonade tanks as Texas freeze hits Q1 results
Russia reports over 8,300 COVID-19 cases in the past day
Kazakh, Azerbaijani presidents hold phone talks
AZAL to Trial IATA Travel Pass in Azerbaijan
Azerbaijani president, first lady watch performance of Kharibulbul festival participants (PHOTO/VIDEO)
Georgia sees decrease in revenues from foreign tourism
Azerbaijani president visits Yukhari Govharagha mosque in Shusha (PHOTO)
External merchandise trade of Georgia up
UNIDO, Gov't of Uzbekistan consulting to explore potential project ideas
Italy fines Google $123 mln for abuse of dominant position
Georgia reports 776 new cases of coronavirus for May 13
Armenians destroyed many mosques during occupation of Azerbaijani lands
Turkey’s export of steel to Uzbekistan up
Georgia takes steps to increase availability of agricultural land for farmers
Turkey’s export of ready-made clothes to Iran up
Iran ready to return to its JCPOA obligations, MFA official hints
Azerbaijani ferry delivers modern equipment to Turkmenistan
Turkey’s export of cement to Kazakhstan up
Azerbaijan discloses composition of national gymnastics team for competitions in Bulgaria
Caucasian Muslims Office chairman talks about new mosque in Azerbaijan’s Shusha
Kazakhstan needs to ensure environmental sustainability of extractive industries - UNIDO
Rolls-Royce sticks to guidance for 2021
Kazakhstan unveils value of payments of compulsory vehicle insurance
Azerbaijani people won Second Karabakh War thanks to unity - Caucasian Muslims Office
Turkmenistan takes part in adoption of documents within "Central Asia-China" meeting
Very happy to participate in Khary Bulbul festival in Shusha – Azerbaijani people's artist
Azerbaijan’s import of pharmaceutical products increases
Kazakhstan, France agree on roadmap for economic co-op until 2030
Latest prices for Azerbaijani oil disclosed
RCEP An Unbalanced Trade Agreement: Piyush Goyal
Indian Union Cabinet approves MoU between ICAI, Qatar finance body to develop accounting and entrepreneurship
IEA expects Azerbaijan to raise oil output in Q2
India's Merchandise Exports Can Hit $400 This Year Says Piyush Goyal
Azerbaijan’s average compliance with OPEC+ deal up - IEA
Festive prayer performed at Teze Pir mosque in Azerbaijan’s Baku (PHOTO)
Kazakhstan’s freight transportation operator opens tender for equipment maintenance
Global biofuel production to recover to 2019 level in 2021
More than 4,000 Indians die of COVID-19 for second straight day
Central Bank of Azerbaijan allocates funds to support its website
Snam sees increase in net financial debt
LNG market remains one of highest emitters of carbon globally
Azerbaijani ombudsman appeals to UN High Commissioner for Human Rights
Baku to host Aerobic Gymnastics World Championships for first time (VIDEO)
Festive prayer due to holy month of Ramadan in Azerbaijan’s Shusha city (VIDEO)
UN Security Council may meet on Palestinian-Israeli confrontation on May 14 - source
All news