Saturday 17 March 2018

Hoping for lower interest rates

Less than two months since it last raised interest rates, the ECB is coming under intense pressure to lower them again with most economists now convinced that it will have to reverse both of this year's rate hikes over the next few months.

And not a minute too soon. Even at the time of the most recent interest rate increase on July 13 there were clear signs that the ECB's rate-raising instincts were premature and that it was confusing a short-term spike in commodity prices with long-term inflationary forces.

Now, with the global economy tottering on the edge of a double-dip recession and the crisis on the eurozone periphery showing no signs of easing, it looks as if the ECB will have to perform a rapid interest rate U-turn.

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