What Will ECB Do This Week:

Since the Euro economy zone have started to show some stabilizing movements, ECB or European central bank is expecting to keep the interest rates at record low, and this interest rate will be charged at 0.75 percent of the principal money. This is one of the record low interest rate in England and the Euro zone. Although the inflation rates in the Euro zone are still at high rates, still ECB has decided to refrain from the cut on Thursday.

It is a matter of concern that on today’s point, 17 countries from euro zone are in recession. There were being so many decisions from ECB which were going against the investors & borrowers. Since the current statistical data is showing some stabilizing move, President of ECB, Morai Draghi has been able to talk in a positive tone on the news conference that was held in Thursday. One of the positive decisions among them & the most important was the keeping the interest rates low.

Gilles Moec, Deutsche Bank economist has said that- \”Rates are definitely on hold. Nothing has been spectacular enough in recent data to force the ECB to any action; there is a recession, but no further deterioration. Lending is weak, but also not deteriorating further, so the ECB is not compelled to act.\”

The positive signs noted from the president of ECB and the survey that was held by purchasing managers showed that worst times of recession may be at an end. At this point, it is also expected that the 23-man governing council is going to have some comfort when they are improving the business morale.

As there are many positive signs from the decisions of ECB, there are also some negative assumptions, rising from the ECB. The ECB may further cut rates to tame inflation, most of the analysts say. We have seen these kinds of low interest rates in the year, when the financial melt down started in 2008. European indices closed flat after the meeting and many analysts think that this cut will make these markets fall.

There are warning assumptions that negative rates can cause a heavy blow to the funds of the market as cash out flows are becoming a major worry in these parts of the globe. It created a peg for the money makers who were there in the market for short terms. These short term investors and retail investors will have to book mark to market losses if the FTSE starts to come down.

Although president of European central bank (ECB), Morai Draghi has said that the bank is operationally ready for the consequences of such positive mode & they have keep themselves all equipped to manage any kind of incidences, the economic analysts are not being able to restrict themselves from making negative assumptions.

At this point one wrong move from ECB can lead the total economy at loss, several fluctuations in the stock market. Still, some kind of optimism from the ECB shows some bit of hope for the investors.

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Category: Finances
Keywords: Dow Jones, ASX, Herbalife, ECB, FTSE, Earnings