1/9/09

Sterling weakness eliminate the shadow of suspense, the euro prospects

Yesterday the Bank of England lowered the benchmark interest rate again by 50 basis points to 1.5%, which is four months, the Bank of England cut interest rates the fourth to boost the UK's increasingly bleak economic outlook, due to the credit market is still tight, economic activity released relief, the British economy to shrink in the third quarter 0.6%; the Monetary Policy Committee (MPC) hinted that the central bank's pace of future interest rate cuts likely to slow down, because there are more and more people speculated that the Bank of England base interest rate level will be reduced to zero and to seek to use unconventional monetary policy measures to promote economic recovery on track; as a result of this cut completely falling into the hands of market expectations, it did not cause the pound after too drastic fluctuations, the more dramatic is that the pound did not fall but rise; so basic may think the recent trend of pounds because of technical reasons accounted for the initiative; while on the other hand, given the MPC has always been to speak of "pragmatic" style, we have reason to believe that Britain should be the pace of future rate cuts will be a slight slowdown, although the market is still firmly believe that the British benchmark interest rate will eventually point to zero, but in the short term should be to see a; summing up, the sterling weakness eliminate the shadow of suspense, the short-term trend will be slightly deviated from the weak economy.

Related reports said that recently Japanese companies as the global financial crisis that limits credit, bank loans have become more strict; in December released the Bank of Japan Tankan business confidence survey shows that most companies found that the lending policies of banks more stringent, not more lenient; because as the economy continues to deteriorate, the banks will be more funds for improving the situation of their own assets, rather than bear the enormous risk of lending; follow-up shows that the Government will be inevitable pressure , banking and government policies will also be staged game.

As the global economic slowdown had resulted in German exports declined in September in Germany, facing national elections this year, Chancellor Angela Merkel, eager to enterprise bankruptcy and the unemployment rate to a minimum; official data released Wednesday showed that in December, the Europe's largest economies in the unemployment rate occurred in February 2006 rose for the first time since, reaching 7.6 percent, higher than in October at 7.5%; On a seasonally adjusted basis last month, the unemployed population increased by 18,000 people, higher than the economics Prior to the expected home; Germany is considering to allocate up to 100 billion euros of emergency funds for enterprises face a credit crisis in the provision of government-guaranteed loan; Although the reform has not been finalized, but provision for the entire European Union in 2000 there will be relief plan become a stumbling block; this embarrassing situation will make it possible to make the market bearish medium-term performance of the euro.

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