Mid-Day Report: Euro Steady after ECB Holds Rates, Extends Loan Offerings, Raises Forecasts
Euro remains steady as ECB left rates unchanged at 1.00% and said it will extend its unlimited loan offerings into 2011. That include seven-day and one-month funding at fixed rates until at least January, as well as three-month loans in October, November and December. In addition, ECB raised growth forecasts for 2010 from 1.0% to 1.6%. Growth projection for 2011 was raised from 1.2% to 1.4%. Inflation is expected to be 1.5-1.7% in 2010 and 1.2-2.2% in 2011. Trichet noted that “current monetary policy stance remains accommodative” and that’s necessary to “fostering sustainable economic growth, job creation and financial stability.”
Elsewhere, EU plans to limit naked short selling of shares and government debts to avoid “disorderly market and possible systemic risks.” EU’s proposal require short selling to “ensure that the security can be borrowed so that settlement can be effected.” EU expects the new rules will “significant exposures in credit default swaps that relate to EU sovereign debt issuers”
On the data front, US jobless claims improved slightly to 472k but remains elevated.