ECB May Keep Key Rate at 4 Percent, Shelving Plans for Increase

升呢

The European Central Bank will probably keep interest rates unchanged, shelving a planned increase as the U.S. housing slump threatens to slow the region's expansion, a survey of economists shows. Policy makers meeting in Frankfurt today will leave the benchmark refinancing rate at 4 percent, according to 44 of 56 economists in a Bloomberg News survey. The bank probably will raise the rate once more this year, a separate survey shows. An increase would be the ninth since December 2005.
The collapse of the U.S. subprime-mortgage market made banks reluctant to lend, pushing up the cost of credit and roiling world financial markets. The ECB said yesterday it's ready to act to rein in borrowing costs. President Jean-Claude Trichet has already retreated from a stance of ``strong vigilance'' on inflation, language he used to signal previous rate increases.
``The most likely scenario is a small pause to let the market get its breath back'' without withdrawing the tightening bias, said Gilles Moec, a senior economist at Bank of America Corp. in London. ``The easiest for the ECB would be not to raise rates in September, but to maintain the word `vigilance' in the statement.''
The central bank will announce its decision at 1:45 p.m. and Trichet will hold a press conference 45 minutes later. Separatoldy, the Bank of England will probably leave its benchmark rate at 5.75 percent, a Bloomberg survey shows. That decision is due at noon in London.

Not `Pre-Committed'

After signaling a September rate increase on Aug. 2, Trichet declined to repeat the ``vigilance'' phrase Aug. 27. The ECB isn't ``pre-committed'' to higher rates and ``what I said Aug. 2 was before market turbulence,'' Trichet said.
The Organization for Economic Cooperation and Development yesterday lowered its forecasts for economic growth and said they may be reduced further following the rout triggered by U.S. subprime mortgages, which are aimed at borrowers with a poor credit history. ``Downside risks have become more ominous,'' Jean-Philippe Cotis, the OECD's chief economist, said in Paris.
Several European banks acknowledged Aug. 9 they had investments in defaulted U.S. mortgages, prompting central banks to inject more than $350 billion of funds into money markets after inter-bank borrowing costs soared.
While that action succeeded in reducing money-market rates for a time, by yesterday the overnight deposit rate for euros climbed to 4.68 percent, the highest in six years. Should volatility persist today, ``the ECB stands ready to contribute to orderly conditions,'' the bank said.

Cash Shortage

``A lack of cash and reluctance to lend is pushing the cost of term money well above that set by the central bank,'' said Jacques Cailloux, chief European economist at Royal Bank of Scotland Plc in London. ``The probability that growth could turn out far weaker than expected due to financial-market turmoil and the possibility of a sharper slowdown in the U.S. has risen significantly.''
The U.S. Federal Reserve will do what's needed to prevent the credit rout from undoing the six-year American economic expansion, Chairman Ben S. Bernanke told the Kansas City Fed's symposium in Jackson Hole, Wyoming, on Aug. 31. The Bank of Japan has already stepped back from raising rates.

The ECB will publish new growth and inflation forecasts today, its first estimate of how the credit squeeze may affect the economy.
Economic Forecasts

In June, the ECB predicted economic growth of about 2.6 percent in 2007 and 2.3 percent in 2008, and said inflation would average about 2 percent this year and next. The bank aims to keep inflation below 2 percent.

Policy makers have expressed concern that inflation will accelerate after the fastest growth since the turn of the decade last year gave companies leeway to increase prices and wages.

Since then, Europe's economy has cooled. The expansion ebbed to 0.3 percent in the second quarter from 0.7 percent in the first. Manufacturing and service-industry growth slowed in August, and consumer and business confidence dropped more than economists forecast.

``With growth slowing down, a rate increase that would take effect 12 months later seems hard to justify,'' said Jean- Francois Robin, an economist at Natixis in Paris, who expects rates to remain on hold until the end of 2008.

升呢

歐元集團主席賈克周三稱,受美國次優抵押貸款危機影響,歐元區明年經濟成長可能放緩.

他說,"和歐盟經濟暨貨幣事務執委阿爾穆尼亞在上周進行了談話,也看了相關經濟機構公布的數據,看起來2007年對整個歐元區而言,沒有什麼值得提及的可能損害經濟的因素."他認為次優風暴可能對今年歐元區經濟造成的影響,根本不值一提.

但同時也說,"我們目前認為,(受次優債危機影響)2008年區內經濟放緩程度可能有所增加,盡管現在就下定論時機還不成熟."

賈克稱,8月引起金融市場震盪的次優貸款危機,對歐元區13國的影響可能也不盡相同."愛爾蘭、西班牙和盧森堡由於金融服務業在經濟中占據重要地位,可能會比其他成員國遭受到較強的衝擊,稅收恐怕也會受影響

升呢

歐元區一些高層官員周三表示,美國次優抵押貸款部門引發的信貸危機,可能會導致明年歐元區經濟成長放緩.

歐元集團主席賈克對記者表示,"看來2007年整個歐元區的經濟成長尚不會遭遇嚴重衝擊."

但他又補充道,"我們目前認為2008年成長受到打擊可能要大一些,雖然現在下定論還太早."

歐盟    經濟暨貨幣事務執委阿爾穆尼亞對歐洲議會表示,重塑對於經濟的信心很關鍵,並稱歐洲經濟的基本面穩健.

"若我們得以重拾信心...2008年的結果就會好些,或者不會像有些人擔憂的那麼糟糕,"他說.

歐盟執委會在5月時曾預測,今年歐元區經濟成長率料從去年的2.7%放緩至2.6%,並於2008年繼續減速至2.5%.

阿爾穆尼亞稱,因受到全球信貸危機的影響,歐元區今明兩年的成長步伐無疑不會超越上述預期.

他認為有理由相信歐洲經濟能夠戰勝目前的困難,但又補充說,"此次動蕩的影響可能會超出我們目前的所見,因此我們必須要提高警惕."

歐盟執委會將於9月11日發布2007年新的成長預估

JKL

thanks

Amigo

Thanks

jingyu

谢帖!!!