ECB says rates may hold until 2010

Jean Claude Trichet said last Thursday that he would hold interest rates as are and that he could not see inflation coming under control until 2010 meaning that for the foreseeable future we just have to get used to rates not having the prospect of coming down. We felt that there may be a rate cut on the way in early 2009 but always on the back of this was the belief that if inflation didn’t come down sooner that it would be Q3/4 of 2009 before we saw a rate cut (potentially).

The current news is partially sabre rattling by the ECB, laying down the strong message (and rightly so) that inflation must be beaten, anything short of the message given by Trichet might send out the belief that if the market falls and inflation remains that we might get a few ‘market favouring’ decisions, this hasn’t happened so far and with any …

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