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ECB and BoE meeting Preview

Wed, Sep 5 2007, 14:43 GMT
by Marina Schiaffino

FXstreet.com

The ECB is still debating whether to go with a move in its current 4% interest rate or not. The Bank passed from a hawkish tone in July to a very dovish outlook as the US sub-prime market collapsed, and now back with the hawks again as they find current volatility in the Euro Zone money markets excessive. All in all, not a clear picture with respect to their decision, one of the trickiest for traders in many time.

Under a more conservative trend, analysts are quite sure that the BoE (Bank of England) will keep its interest rates on hold at a 5.75%.

Check the effect that the meetings have over the pairs in our Rates and Charts Section or compare the movements of the different banks in our World Interest Rates Table.

In-Depth Analysis

• Daily Forex Commentary - Markets are waiting for ECB by Jyske Bank
• Forex Weekly Review and Outlook - Focus Turns to ECB and NFP by ActionForex.com
• Friday Notes - ECB: Rate Hike Postponed For Now by HVB Group
• Sunrise Market Commentary: Fixed Income - ECB's Weber sees characteristics classic banking crisis by KBC Bank

Related News

• ECB Says Will Launch Quick Tender At 0735 GMT Thursday (Dow Jones)
• US dollar gains vs major rivals; euro lower ahead of ECB decision (Thomson Financial News)
• ECB report to EU indicates bank will likely leave rates unchanged today - report (Thomson Financial New)
• BoE set for rare statement with unchanged rate decision to address credit crunch (Thomson Financial News)
• ECB says stands ready to act if money market volatility persists tomorrow UPDATE (Thomson Financial News)
• ECB May Act Thursday If Euro Money Market Volatility Persists (Dow Jones)
• UPDATE: Hawk's Wariness Hints At Rate Pause For ECB On Thursday (Dow Jones)
• ECB Watch: Rates Seen Steady At 4.0% On Liquidity Concerns (Dow Jones)

Analysts' Comments

• Lena Komileva, G7 economist at Tullet Prebon:
  "While the ECB is widely expected to leave the main refinancing rate unchanged tomorrow there is a good chance that they may cut the lending facility rate as a confidence-boosting gesture to the markets. This would be unprecedented in the ECB's history, but current market conditions call for it." - Dow Jones
• Erik Nielsen, economist at Goldman Sachs:
  "The communication on Thursday will be tricky, but we expect Trichet to defend the last month's scrambled communication with the insistence that they never pre-committed to a hike, and to try to sound hawkish without using the 'strong vigilance' code word." - Dow Jones
  
• Isabelle Job, economist at Credit Agricole:
  "Given the jittery state of things, the ECB seems likely to leave rates unchanged in September while maintaining its upside bias, which is a way of saying that once things have calmed down, a further tightening could prove necessary to quell mid-term inflationary pressures." - Dow Jones
• James Knightley, strategist at ING Financial Markets:
  "There is still a very strong case for a rate rise, particularly with gross domestic produce growth looking set to rise by around 3% this year and food prices bouncing back." - Dow Jones

Published on  Thu, Sep 6 2007, 08:13 GMT