|
ECB leaves rates unchanged
|
 |
May 20, 1999: 9:35 a.m. ET
Economists and markets not surprised at decision to leave repo rate at 2.5%
|
LONDON (CNNfn) - The European Central Bank decided to stand pat on interest rates Thursday, in line with analysts' predictions.
Economists and the markets were expecting a neutral statement from the fortnightly meeting of the ECB's policy-making council, which decided to leave the benchmark repo lending rate unchanged at 2.5 percent.
"This just underlined the ECB's [stance] that rates are on hold for the time being," Julian Callow, chief European economist at Dresdner Kleinwort Benson in London, told CNNfn.com.
Callow pointed to early signs that European economies are improving, but he warned that the fall in consumer confidence, due to the Kosovo crisis, remains a problem.
Robert Prior, European economist at HSBC in London, sounded a more upbeat note. He believes the ECB will see the effects of its greater-than-expected half a percentage point cut back in April come through over the next two months.
"Our view is that in the next two months consumer spending will increase and industrial production will come back," he said. He believes the kicker will coincide with a definite upturn in the global economic cycle as Asia-Pacific economies show more signs of rebounding.
Prior predicts that the ECB could leave the Repo rate unchanged until the end of next year, when the "move will be upwards."
In a poll of 30 economists conducted by Reuters this week, 5 respondents predicted the ECB would cut its key lending rate by a further quarter of a percentage point later this year. 
|
|
|
|
|
 |
|
