But Dollar, Meanwhile, Hits the Skids – Hawkish ECB Comments Cited
Jun 6th, 2008 | By Doug Casey | Category: US Dollar & Forex TradingIn the currency market, the dollar tanked against the euro. Late Thursday, the euro was trading at $1.5568 vs. $1.5435 on Wednesday.
The European Central Bank, at its meeting yesterday, decided to leave its key interest rate at 4%, as expected. However, it was the accompanying rhetoric that caused a stir.
“It is not excluded that, after having carefully examined the situation, that we could decide to move our rates a small amount in our next meeting in order to secure the solid anchoring of inflation expectations,” said ECB President Jean-Claude Trichet.
Trichet’s qualifier—“I don’t say it’s certain. I say it’s possible.”—sounded unconvincing to many.
“Trichet continues to sound the hawkish trumpets, revealing that some on the ECB board wanted to hike rates, and admits that while not certain, the ECB could raise rates next month. This is significantly more hawkish than any expected,” wrote Marc Chandler, of Brown Brothers Harriman.
The ECB’s also released revised staff projections for an average inflation of between 3.2% and 3.6% in 2008, with a midpoint of 3.4%. That’s dramatically higher than the March projections for a midpoint at 2.9%, and well above the ECB’s target of below 2%.
Source: But Dollar, Meanwhile, Hits the Skids – Hawkish ECB Comments Cited
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