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06.03.2014 19:20

American focus : the euro rose on Draghi’s comments

The euro rose sharply after the European Central Bank left interest rates unchanged , despite the extremely low inflation in the eurozone. This suggests that bank managers agree that pricing pressure will gradually increase without any serious further assistance from the central bank. ECB left its key interest rate at which it provides loans to banks under its regular lending facility , at a record low of 0.25% , where it had been since November . Day interest rate on deposits by banks at the ECB , also remained unchanged at zero.

The European Central Bank raised its forecast for GDP growth in the 18 countries of the euro zone in 2014 to 1.2 % from December's 1.1%. At a press conference following the last meeting of the Bank said ECB President Mario Draghi . At the same time, the ECB cut its inflation estimate for the current year from 1.1% to 1%. As the head of the ECB , it is connected to , including the expected decline in oil prices in the whole euro exchange rate stability . " Eurozone a long period of low inflation, the gain will be gradual. But the decline in energy prices will support the real incomes of the population ," - said M.Dragi .

In 2015, the eurozone's GDP will grow by 1.5 %, while inflation accelerated to 1.3% , as expected in December. In addition , the ECB unveiled forecasts for 2016 and thus for the first time extended the forecast horizon of three years: economic growth in 2016 will be 1.8 %, inflation - 1.5% on average per year , but by the 4th quarter of the price increase will increase to 1.7% .

According M.Dragi , the ECB intends to keep key interest rates at or below the current for a long time . ECB President confirmed that his earlier assessment of the situation in the economy remain unchanged : the eurozone waiting a long period of low inflation and inflation in the coming months in the region will remain near current levels. It will gradually rise over the next period of 2.5 years.

ECB chief said that " recovery in the eurozone continue slow pace " and geopolitical risks may adversely affect the growth rate .

Macroeconomic data for the last four weeks have improved, but " continue to confirm the need to maintain expansionary policies of the ECB ," the chairman of the central bank.

In his speech M.Dragi once again drew attention to the fact that the ECB is not targetiruet euro exchange rate , although this is crucial for economic growth and inflation in the euro area .

Pound rose after the announcement of the Bank of England of its rate decision and asset purchase program . Note that the Bank of England today did not bring any surprises , once again leaving the rate at a record low 0.5%. Last time the Central Bank changed the level of rates March 5, 2009 , lowering it by 0.5% to 0.5%. MPC also decided to keep the size of the asset purchase program at £ 375 billion, the Central Bank said that keep rates at the current level as long as the unemployment rate / p Britain will not fall to the level of 7% , which will not happen until 2016 . Experts point out that it is clear that the authorities want to keep policy accommodative as long as possible , to ensure the stability of the economic recovery . However, the picture on the labor market combined with data on growth suggest that the Bank is unlikely to convince markets that a rate increase .

Yen approached the two-month low against the dollar after the Japanese government announced that the state pension fund (GPIF), is the largest in the world, no longer need to focus on investment in domestic bonds , taking into account the acceleration of inflation in the country. The report , prepared by the group , says that GPIF should seek opportunities for investment that could bring him an annual income of 1.7% plus the cost of increase of salaries of employees. An additional factor in the decline in the yen , a decrease of interest in safe-haven currency on the basis of some easing of tensions around Ukraine.

06.03.2014 18:20

European stocks close

Market Focus

  • The Bank of Japan decided by a 7-2 majority vote to hold the interest rate at -0.10%
  • Earnings Season in U.S.: Major Reports of the Week
  • U.S. commercial crude oil inventories decreased by 4.7 million barrels from the previous week
  • Australian unemployment rate stable at 5.6% in June
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