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dezembro 02, 2004
ECB warns forex intervention an option as interest rates kept steady
Fonte: France Press
European Central Bank president Jean-Claude Trichet raised the possibility of intervention in currency markets to rein in the soaring euro, after the bank left interest rates steady.
In the wake of a new high for the euro against the dollar, Trichet warned that intervention in currency markets "is a weapon" central banks had at their disposal.
But Trichet declined to be drawn further on the possibility of ECB intervention in the markets to halt the euro's rise.
"We consider the recent (euro) moves are unwelcome," he said, reiterating recent rhetoric from the ECB.
Against the background of slowing eurozone growth, buoyant inflation and a rising euro, the ECB decided earlier Thursday to leave its key interest rate steady at 2.0 percent for the 18th month in a row.
The move had been widely expected by analysts.
The ECB also left its deposit rate at 1.00 percent and the rate on the marginal lending facility at 3.00 percent.
The euro, which hit a record high point of 1.3384 dollars in early European trading Thursday, was steady at 1.3327 dollars after the decision.
Analysts have ruled out for the moment the possibility of the ECB raising interest rates due to the euro's sharp appreciation against the dollar, which is weighing on eurozone economic growth.
And, because eurozone inflation, fuelled by soaring energy prices, is running above the ECB's medium-term target of close to but not greater than 2.0 percent, analysts do not expect the ECB to consider cutting interest rates either any time soon.
Preliminary data released by the EU statistics office Eurostat on November 30 showed that eurozone inflation eased to 2.2 percent in November from a year earlier, from 2.4 percent in October.
In a news conference after the ECB rate decision was made public, Trichet voiced concern about the short-term outlook for inflation in the eurozone although there were no signs that higher oil prices were pushing up underlying inflation.
"At the current juncture oil price developments are having a sizeable impact on consumer prices in the euro area, while there is no significant evidence that stronger underlying domestic inflationary pressures are building up," Trichet said.
Faced with the dilemma of slowing growth but high inflation, many analysts expect the ECB to leave its interest rates where they are for most of next year even though big central banks such as the US Federal Reserve and the Bank of England have already started the cycle of monetary policy tightening.
As the euro rises against the dollar, pressure has been growing for the ECB to intervene in the foreign exchange market -- with or without coordination from Japanese authorities -- in order to weaken the soaring European currency.
However, analysts, many of whom had been prepared for harder language on intervention from Trichet, said that his comments signalled the ECB would tolerate a stronger euro before intervening in currency markets.
"Any intervention looks unlikely at least until the euro goes up some more," said Naeem Wahid at HBoS in London.
With the strong euro weighing on eurozone exports, the ECB also trimmed its 2004 and 2005 economic growth estimates Thursday but raised its forecasts for inflation.
For 2004, the ECB cut its forecast for gross domestic product growth in the 12-nation eurozone to 1.8 percent from an estimate of 1.9 percent made in September.
It forecast 1.9 percent growth in 2005 compared with 2.3 percent previously.
But it raised its 2005 inflation forecast to 2.0 percent -- the maximum tolerable limit for the ECB -- compared with 1.8 percent previsouly.
It left its 2004 inflation estimate at 2.2 percent.
Publicado por esta às dezembro 2, 2004 05:50 PM