Euro Exchange Rate Outlook : It’s not clear that the ECB is on board with the themes of the day (deleveraging, deflation and downsizing). Yesterday Trichet said "I do not exclude that we will continue to decrease euro interest rates, if we have confirmation of the alleviation of risks to price stability." In other wrods, he wants everybody to think inflation is still the top priority and the bank needs proof it is falling before it will cut rates. Is now the right time to be trumpeting price stability as the only priority? The WSJ cites several foreign exchange analysts who say the ECB is moving too slowly. The Fed and Bank of England have moved much faster ,which is deemed appropriate for recession conditions. But the ECB points out that with the interbank market seized up, a cut doesn’t have much effect on activity. Still, the bank is expected to cut the first week of December by 50 bp to 2.75% and by as much as 75 bp by end-March.
Pounds to Euros currently 1.1950 to buy euros
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Barbara Rockefeller
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