ECB, about to keep rates on hold ahead of market turmoil hitting Europe

Thu, Oct 2 2008, 08:00 GMT
http://www.fxstreet.com

FXstreet.com (Barcelona) – ECB’s Monetary Policy Committee is expected to keep rates on hold at 4,25% later today among fears of financial crisis spreading into Europe, which have increased considerably the odds for a rate cut before the end of the year.

Although most analysts share the opinion that the ECB will hold rates today, recent events from the US have changed the whole economical context. Some of the biggest names in Wall Street have failed while the whole financial system is threatening with a meltdown of historical proportions and uncertain consequences.

Inflation, as it has been seen in the latest months seems to have peaked and started to moderate, while, the collapse of big financial institutions plus other unprecedented bank rescues have increased the pessimism over global and Euro Area’s economy, outbalancing the risks to economy to the downside.

The focus will be, thus, on Trichet’s Conference, to see whether the members of the Bank’s Monetary Policy Committee consider a rate cut on the next months in order to safeguard Euro Zone’s economy, or they think that the crisis could be tackled down with liquidity injections, discarding further rate cuts.

EUR/USD

© 2009 “FXstreet.com. The Forex Market” All Rights Reserved. Every effort is made to provide accurate and complete information. However, with the thousands of documents available, often uploaded within short deadlines, we cannot guarantee that there will be no errors. Any republication or redistribution of FXstreet.com content is expressly prohibited without the prior written consent of FXstreet.com.
Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.
Any opinions, news, research, analyses, prices or other information contained on this story, by FXstreet.com, its employees, partners or contributors, is provided as general market commentary and does not constitute investment advice. FXstreet.com will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.