Waiting for European Central Bank Meeting

Business Materials 7 August 2008 13:40 (UTC +04:00)
Waiting for European Central Bank Meeting

Azerbaijan, Baku, 7 August / Trend corr. A.Badalova / The U.S. dollar has weakened on the threshold of the European Central Bank (ECB) meeting. On 6 August, the rate of euro improved from dollar to $1,5468. The day before, dollar dropped to its minimum rate $1,5447 in recent seven months.

The meeting of the United States Federal Reserve System, which was held within the week, caused no unexpectedness. The rate has been kept on the 2% yearly. The inflation rate keeps high in the United States and inflation perspectives has not been defined yet.

Today, financial markets expect the decision by ECB and Bank of England about the interest rates. Analysts consider that the meeting of ECB will keep rates unchanged on the 4.25%. However, unfavorable data in eurozone may cause softening of money-and-credit policy.

"We doubt very much that the central bank will raise interest rates further with the economy already stagnating and inflation set to fall sharply as energy prices subside and deteriorating employment conditions keep a lid on wage claims," Jennifer McKeown, and economist in the British Consulting Company on Economic Researches Capital Economics, said.

During the latest meeting ECB has increased its basis interesting rate by 0.25% - to 4.25%.

According to McKeown, the eurozone could experience a technical recession this year.

"Weaker outlook should in time prompt the ECB to soften its hawkish stance and eventually start to loosen policy," to McKeown said.

According to the British company the ECB rates to fall to 3.0% by the end of 2009.

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