Como se combate o populismo? "Com eleições", responde Fukuyama

[npatriarca]

ou seja, não será por subida de juros que os mercados não manterão o padrão de subida...

[Keyser Soze]

ECB Leaves All Key Interest Rates Unchanged

FRANKFURT (Dow Jones)--The European Central Bank kept all key interest rates unchanged Thursday.

The decision, in line with market expectations, leaves the key minimum bid rate, which the bank charges for its main refinancing operations, at 3.00%.

The ECB also confirmed the deposit rate at 2.00% and the marginal lending rate at 4.00%.

In a survey of 43 financial institutions conducted by Dow Jones Newswires, 42 respondents said the ECB was likely to keep rates unchanged at Thursday's meeting.

The ECB didn't provide a rationale for its decision, but ECB President Jean-Claude Trichet is scheduled to hold a press conference at 1230 GMT.

At its meeting Aug. 3 the ECB voted for a 25 basis point rate increase, lifting the key lending rate to 3.00%. This marked an apparent acceleration in the hitherto quarterly tightening campaign, suggesting changes will be made every two months.

Against this background, the ECB president is expected to signal another 25 basis point rate increase for the next meeting Oct. 5, saying the bank is inclined to exercise (strong) "vigilance" regarding the risks to price stability.

Trichet has used the expression just before each of the four 25 basis point rises in the central bank's current tightening cycle.

But of even more interest will be if the ECB indicates further monetary tightening beyond October. Right now, economists and markets tend to expect one more 25 basis point rate hike in early December. However, due to the looming global growth slowdown, this forecast is uncertain.

Holger Schmieding at Bank of America assumes the ECB will "maintain the forward-looking language in its statement, suggesting that the removal of monetary accommodation will probably have to continue even after October."

For the past few months the ECB had said a progressive withdrawal of monetary accommodation would be warranted, if its assumptions and baseline scenario are confirmed.

"With economic growth well above trend and inflation well above target, even the proverbial ECB doves probably agree that rates need to be steered at least towards the lower end of the neutral range," Schmieding wrote in a research note before today's rate decision.

He puts this range at 3.5% to 4.25% and suspects some ECB members probably assume "a somewhat higher range."

The "neutral" rate allows the economy to expand at its trend rate without igniting inflation. The trend rate of gross domestic product growth in the euro zone is currently seen at around 2.00%.

At the press conference, the ECB will also deliver fresh staff projections on growth and inflation for this and the following year.

Gross domestic product growth appears very likely to be at the upper end of the 1.8% to 2.4% range the ECB staff stated as its full-year projection in June. At the time, the 2007 project was for growth between 1.3% and 2.3%.

Economists will also be keen to see the new projections for 2007 inflation. Trichet has already said he expects it to remain on average above the ECB's 2.0% target for the year.

-By Christian Vits, Dow Jones Newswires, +49 69 29725-509, christian.vits@dowjones.com

[Keyser Soze]

11:45
ECB Rate Announcement out at 3.00% (no change) as expected.