ECB to keep powder dry on rates despite jobless spike

The European Central Bank will likely keep rates at an all-time low at its first meeting of the year on Thursday, analysts said, despite record high unemployment in the recession-wracked eurozone.

However, economists expect ECB chief Mario Draghi to keep open the door for further rate cuts to support the 17-nation euro area, especially if the economy takes another turn for the worse or the debt crisis strikes the markets again.

"A rate cut or any other action by the ECB on Thursday would come as a surprise to us, despite low inflation, recession and high unemployment," said Christian Schulz at Berenberg Bank.

"Leaving the door open to more action is important to reassure markets that the ECB remains ready to act if necessary," added the economist.

Draghi already told reporters after the last meeting in December that the 23-member board of the ECB had held a discussion on the merits of cutting rates but decided in the end to hold them at the record low 0.75 percent.

Since then, the eurozone economy has thrown up a mixed bag of data for ECB governors to chew over.

Unemployment has reached a record high of 11.8 percent, according to official figures, with nearly 19 million people without work in the embattled single currency zone.

Nevertheless, there were also tentative signs of recovery, with some forward-looking data providing encouragement.

Last week, the closely watched Purchasing Managers Index or PMI for the entire euro area hit a nine-month high, offering hope the single currency area could be moving out of its deep double-dip recession.

Recent business confidence data for Germany, Europe's biggest economy, have also come in better than expected.

Marco Valli from UniCredit bank said there had been "a modest improvement in growth indicators and ongoing positive developments in financial markets, both of which are likely to convince the ECB to remain in wait-and-see mode".

After Draghi calmed markets with his pledge in July to do "whatever it takes" to preserve the euro, borrowing costs for countries like Spain and Italy have plunged to still high but more manageable levels.

Spain now pays just over 5.0 percent to borrow for 10 years on the open market, while Italy pays just over 4.0 percent.

But Draghi will for now be unwilling to cut rates to boost the economy for fears of slackening the pressure on these countries -- and the eurozone as a whole -- to reform and become more competitive, analysts forecast.

Analysts at Commerzbank noted markets have not positioned themselves for a rate cut until at least September.

And after a historic 2012 during which the ECB broke new monetary policy ground by pledging to buy the bonds of struggling countries under certain conditions, analyst Carsten Brzeski from ING bank said this year would be calmer.

"It looks unlikely that in 2013 the ECB can provide another game changer for the euro crisis like the OMT programme last year," said the economist, referring to the bank's bond-buying plan.

The ECB "wants to keep its powder dry for as long as possible ... in our view, only a renewed worsening of the economy could trigger another rate cut in the course of 2013," said Brzeski.

--

Get stories like this on the Yahoo app and discover more every day.
Download it now.
Loading...
  • Tribune Media completes sale of Tribune Tower, other assets
    Tribune Media completes sale of Tribune Tower, other assets Associated Press - 3 minutes 52 seconds ago

    Tribune Media has completed the sale of several real estate assets, including the Tribune Tower in Chicago. The Chicago-based company announced last month that it was selling the 1925 neo-Gothic tower ... … More »

  • Swiss Exchange confident of post-Brexit access to EU stock market
    Swiss Exchange confident of post-Brexit access to EU stock market Reuters - 5 minutes ago

    The SIX Swiss Exchange said on Wednesday it was confident it can continue serving investors in the European Union without having to set up a new exchange after Britain exits the EU. Switzerland is not part of the EU and currently serves customers … More »

  • Tokyo to propose moving more venues for Olympics
    Tokyo to propose moving more venues for Olympics Associated Press - 11 minutes ago

    Tokyo's original plans for a compact Olympics in 2020 continue to fall by the wayside. A Tokyo government panel is set to propose moving more venues outside of the city — including hundreds of kilometers ... … More »

  • SABMiller investors cheer $100 billion-plus AB InBev takeover
    SABMiller investors cheer $100 billion-plus AB InBev takeover Reuters - 18 minutes ago

    LONDON/BRUSSELS (Reuters) - SABMiller (SAB.L) shareholders overwhelmingly backed the brewer's $100 billion-plus takeover by Anheuser-Busch InBev (ABI.BR) on Wednesday, clearing the last big hurdle for one of the largest corporate mergers in history. … More »

  • The Latest: Obama says people don't give Clinton credit
    The Latest: Obama says people don't give Clinton credit Associated Press - 20 minutes ago

    The Latest on the U.S. presidential election (all times EDT): 9:20 a.m. President Barack Obama says people don't give Hillary Clinton enough credit — perhaps partially because she's a woman. Obama was ... … More »

  • Lufthansa board approves takeover of Brussels Airlines
    Lufthansa board approves takeover of Brussels Airlines Reuters - 33 minutes ago

    Lufthansa (LHAG.DE) said its supervisory board has approved plans to acquire the remaining 55-percent stake in Brussels Airlines via the exercise of a call option as part of its plan to boost its low-cost unit Eurowings via acquisitions. The … More »

  • ING selling $300 million Kotak Mahindra stake - term sheet
    ING selling $300 million Kotak Mahindra stake - term sheet Reuters - 34 minutes ago

    Dutch financial services company ING Group is selling a $300 million stake in Indian lender Kotak Mahindra Bank Ltd in a block trade on Thursday, according to a deal term sheet seen by Reuters. The deal has an upsize option of up to $550 million, … More »

  • Credit Suisse CEO says bank relatively well positioned for Brexit
    Credit Suisse CEO says bank relatively well positioned for Brexit Reuters - 35 minutes ago

    Credit Suisse (CSGN.S) Chief Executive Tidjane Thiam said on Wednesday that his bank was relatively well placed to deal with the impact of Britain's vote to leave the European Union. Credit Suisse's EU investment banking business is run out of … More »

  • Oil climbs on hopes of output-limiting deal in November
    Oil climbs on hopes of output-limiting deal in November Reuters - 43 minutes ago

    Oil prices rose on Wednesday, after sharp losses in the previous session, as the focus shifts to a potential output-curbing deal from OPEC later this year and a surprise drawdown in U.S. crude stocks. Brent crude (LCOc1) was up 59 cents to $46.56 a … More »

  • Tie-up of world's biggest beer makers clears final hurdle Associated Press - 46 minutes ago

    A deal worth over $100 billion to combine the world's two biggest beer companies cleared its last major hurdle Wednesday when the shareholders of SABMiller approved the takeover by Budweiser maker Anheuser-Busch ... … More »

  • Pakistan launches $500 million in Islamic bonds AFP - 49 minutes ago

    Pakistan is set to launch $500 million in Islamic bonds to raise money for its foreign exchange reserves, a senior official said Wednesday, as a three-year IMF bailout package nears a close. The government ... … More »

  • Deutsche Bank relief helps European markets regain footing
    Deutsche Bank relief helps European markets regain footing Associated Press - 50 minutes ago

    European stock markets brushed aside a mixed performance in Asia earlier Wednesday to post solid gains amid some relief over the financial future of Germany's largest bank, Deutsche Bank. KEEPING SCORE: ... … More »

  • BlackBerry outsourcing smartphone design in strategic shift; shares up
    BlackBerry outsourcing smartphone design in strategic shift; shares up Reuters - 55 minutes ago

    BlackBerry Ltd will outsource the development and design of its flagship smartphone, an industry it helped pioneer, as it bets its future on software and services, the Canadian technology company said on Wednesday. The new helped send BlackBerry … More »

  • Germany denies preparing Deutsche Bank rescue plan Reuters - 1 hour 15 minutes ago

    The German government denied it was working on a rescue of Deutsche Bank as Germany's biggest lender boosted its balance sheet by selling its British insurance business on Wednesday. Deutsche is facing a $14 billion fine from the U.S. Department of … More »

  • Owner of Malaysia's Proton shortlists 5 bids for equity sale Associated Press - 1 hour 20 minutes ago

    The owner of Malaysian national carmaker Proton says it has shortlisted five foreign partners for a partnership that includes an equity sale aimed at reviving the loss-making company. Syed Faisal Albar ... … More »

  • Saudis soften oil stance on Iran but OPEC deal still elusive Reuters - 1 hour 21 minutes ago

    OPEC might still agree an oil output-limiting deal later this year as the economic problems of its de-facto leader Saudi Arabia force Riyadh to cede more ground to arch-rival Iran. Saudi Energy Minister Khalid al-Falih said on Tuesday Iran, Nigeria … More »

  • Actuant tops 4Q profit forecasts Associated Press - 1 hour 21 minutes ago

    The Menomonee Falls, Wisconsin-based company said it had profit of 29 cents per share. Earnings, adjusted for one-time gains and costs, came to 30 cents per share. The results beat Wall Street expectations. ... … More »

  • Deutsche helps lift European stocks before Yellen, Draghi
    Deutsche helps lift European stocks before Yellen, Draghi Reuters - 1 hour 31 minutes ago

    By Nigel Stephenson LONDON (Reuters) - A recovery in Deutsche Bank shares helped push European stocks higher on Wednesday, easing concerns over Germany's financial sector that had hit equities in Asia ... … More »

  • Dissident SABMiller shareholder Aberdeen disappointed with vote Reuters - 1 hour 39 minutes ago

    LONDON (Reuters) - Aberdeen Asset Management (ADN.L), an SABMiller (SAB.L) shareholder that opposed the brewer's takeover by Anheuser Busch InBev (ABI.BR), said it was "obviously disappointed by not ... … More »

  • BlackBerry is giving up on making its own phones
    BlackBerry is giving up on making its own phones Business Insider - 1 hour 52 minutes ago

    Reuters John Chen, CEO of BlackBerry. It’s the … Continued The post BlackBerry is giving up on making its own phones appeared first on Business Insider. … More »

  • Deutsche gets lift from $1.2 billion sale of Abbey Life to UK's Phoenix Reuters - 1 hour 53 minutes ago

    Deutsche Bank AG (DBKGn.DE) has sold its British insurance business Abbey Life to Phoenix Group Holdings (PHNX.L) as it sheds non-core assets and reduces its balance sheet in an effort to reassure anxious investors and meet regulators' demands. … More »

  • Russian charged for flying drone over Polish PM's office AFP - 1 hour 55 minutes ago

    Polish prosecutors said on Wednesday they had charged a Russian citizen with violating airspace laws for allegedly flying an unauthorised drone over the prime minister's office in Warsaw. Identified only ... … More »

  • Any ECB scheme to buy stocks could total 200 billion euros - ABN AMRO Reuters - 1 hour 56 minutes ago

    The ECB is widely expected to extend its 1.7 trillion euro (£1.47 trillion) asset purchase programme given still low inflation and tepid economic growth, both of which the programme is designed to combat. In a note, ABN AMRO said the structure used … More »

  • Moldova bans Ukraine meat over African swine fever fears Associated Press - 2 hours 1 minute ago

    Moldovan authorities are banning the import of live animals and meat from Ukraine due to fears of African swine fever. Agriculture Minister Eduard Grama says the ban begins Wednesday after several suspected ... … More »

  • European stocks rebound awaiting OPEC decision
    European stocks rebound awaiting OPEC decision AFP News - 2 hours 2 minutes ago

    European stock markets rebounded on Wednesday, brushing aside a broad retreat across Asia, as investors paid close attention to a meeting of OPEC to tackle a global supply glut. Around 1030 GMT, London's benchmark FTSE 100 index was up 0.7 percent. … More »

 
Recent Quotes
Symbol Price Change % Chg 
Your most recently viewed tickers will automatically show up here if you type a ticker in the "Enter symbol/company" at the bottom of this module.
You need to enable your browser cookies to view your most recent quotes.
 
Sign-in to view quotes in your portfolios.

MARKET MOVERS

  • Most Actives
    Most Actives
    NamePriceChange% Chg
    0.151+0.010+7.09%
    N21.SI
    0.975+0.010+1.04%
    Y92.SI
    0.144+0.002+1.41%
    5DM.SI
    4.00+0.01+0.25%
    Z74.SI
    0.675+0.050+8.00%
    BMT.SI
  • % Gainers
    % Gainers
    NamePriceChange% Chg
    0.37+0.12+45.10%
    AZT.SI
    0.24+0.05+26.32%
    AWI.SI
    0.15+0.02+15.38%
    RF7.SI
    0.215+0.026+13.76%
    I07.SI
    0.13+0.01+8.33%
    5UE.SI
  • % Losers
    % Losers
    NamePriceChange% Chg
    0.112-0.028-20.00%
    BEH.SI
    0.66-0.05-7.04%
    BTE.SI
    0.32-0.02-5.88%
    P9D.SI
    0.225-0.010-4.26%
    PA3.SI
    0.23-0.01-4.17%
    K14.SI

Market Data

  • Currencies
    Currencies
    NamePriceChange% Chg
    1.3603+0.0008+0.06%
    USDSGD=X
    1.5251+0.0002+0.01%
    EURSGD=X
    1.7690-0.0012-0.07%
    GBPSGD=X
    73.8980+0.042+0.06%
    SGDJPY=X
    5.6994-0.0029-0.05%
    SGDHKD=X
    3.0418+0.0028+0.09%
    SGDMYR=X
    9,519.8809-8.5723-0.09%
    SGDIDR=X
    4.9050-0.0005-0.01%
    SGDCNY=X
    1.0427+0.0005+0.05%
    AUDSGD=X
  • Commodities
    Commodities
    NamePriceChange% Chg
    1,326.20-4.20-0.32%
    GCZ16.CMX
    19.10-0.06-0.31%
    SIZ16.CMX
    93.44+0.45+0.49%
    ^XAU
    2.19+0.02+0.76%
    HGZ16.CMX
    43.85+0.41+0.94%
    CLV16.NYM
  • Bonds
    Bonds
    TreasuryYield (%)Yield Change
    1.12-0.01
    ^FVX
    1.56-0.03
    ^TNX
    2.29-0.04
    ^TYX