FRANKFURT (Dow Jones) – The European Central Bank (ECB) is its key rate next week is likely to unchanged. (Reuters photo:)
Face-to-negligible inflation risk and a rather loose regional growth outlook is likely to Governing Council also expected to do nothing that would be suitable, the changing interest rate expectations in financial markets. These run out out that the ECB this year, no longer at the Interest screw is turning. However, are details on the proposed Changes to the security framework in refinancing transactions to expect commercial banks.
Economists are inferred from the fact that the Main refinancing rate on Thursday as well on its all-time low of 1.00% is confirmed as the other base rates, Marginal lending rate and deposit rate. The Inflation in the euro area as a whole remains subdued as are described. While the harmonized consumer price index rose (The HICP) in March, at an annual rate of 1.5% – in February this Rate of only 0.9% located – but this increase was based probably mainly in energy prices.
The ECB predicted for 2010 and 2011 only average annual inflation rates of 1.2% and 1.5%. Your Price stability objective for an inflation rate of "below but close to 2%" in front. Warnings about inflation risks were taking against this background weird.
In contrast to the overall index of the prices is energy and unprocessed food adjusted core index – regardless of the re-growing economy – in an ongoing Downward trend. Its annual rate fell from 1.7% in February 2009 to 0.8% in February 2010. Many observers expect that core inflation because underutilized capacity will decline further, in accordance with the End of the financial crisis subsided deflation debate give food could.
Before a monetary policy tightening by the ECB would have to Conviction of most observers already present in abundance in the Reduce existing financial liquidity. Currently, the ECB as conditions. Longer-term transactions, such as with twelve or six months’ duration, will not be issued, and is a minimum Vollzuteilung to it soon just at the one-week main refinancing operations.
A milestone in the reduction of liquidity supply the unwinding of the first, issued in June 2009 its lending business for one year. Then expected the banks to their need for money to cover more than the interbank market, to which most of them have access again.
Major news on the "Exit" to the ECB by the current Council meeting to be expected. In principle, ECB President Jean-Claude Trichet the process of withdrawing from the measures to increase Lending to the banks already outlined to October. Observer But hold it possible that he will on Thursday announce which volume the next upcoming tender with long-term three-month maturity will have. Before the financial crisis, there were 50 billion have been.
Expect also indications are the new security framework for refinancing operations with commercial banks. Trichet had in the European Parliament recently said that the ECB from 2011 continue Government bonds with a rating of below "A-" in the context of Repo transactions will accept. That should, however, for bonds with lower credit rating higher discounts (haircuts) introduced be.
By Hans-Bentzien, Dow Jones Newswires, +49 (0) 69 29725 300,
Hans.Bentzien @ dowjones.com
DJG / have / kth / sh
Tags: annual inflation rates, inflation risk, interest rate expectations, inflation risks, reuters photo
