News Worms
News Worms

Trump tariff move 'dangerous — European Central Bank

Trump tariff move 'dangerous — European Central Bank

The ECB left its refinancing rate at 0%, while the rate paid on deposits parked overnight at the bank was left at negative 0.4% and the rate on the deposit facility was left at 0.25%. He is a dove and it's clear he still wears the pants on the Governing Council'. The ECB is expected to keep policy unchanged on Thursday but could tweak its accompanying statement to offer some clues about plans to end its unprecedented bond purchases this year. It would be interesting though to see whether policymakers are preparing the ground to exit stimulus, something that has been recently echoed.

U.S. inflation is set to be released on Thursday afternoon at 12:30pm and this will be watched by investors as it could give future direction to how many interest rates hikes to expect this year. This might give way for interest rates to be hiked by the mid-2019. If the European Central Bank tapers or ends QE, the currency is likely to gain strength.

The euro has been on an upward march in recent times thanks to the region's economic growth and lower political risks.

US President Donald Trump's plan to impose tariffs on steel and aluminium imports as well as threats of retaliation by the US's biggest trading partners have raised the spectre of a global trade war. This morning's Chinese trade data are only likely to reinforce the United States administration's perception of unfair trade as Chinese exports were seen to show a rise 44.5% in February, the best performance in over two years.

"This outlook for growth confirms our confidence that inflation will converge towards our inflation aim.over the medium term", Draghi said. Regarding the Latvian banking scandal, Draghi said the ECB did not have enough information on the matter and was sending a letter to the European Court of Justice seeking a clarification on whether the detention of the central bank governor Ilmar Rimsevics were in compliance to the ESCB statute.

He also reminded Trump that previous trade wars had typically led to a strengthening of the dollar.

Bitcoin steadied to after slumping more than 7 per cent on Wednesday after US and Japanese regulators tried to tighten their grip on cryptocurrencies.

In December, the European Central Bank predicts inflation to rise to 1.7% by 2020, which is again below the target. Predictions are for the BoJ to maintain its loose monetary policy as inflation continues to undershoot its target of 2.0%.

On the currency markets the dovish message won out.

The euro jumped higher on the news, rising from US$1.2379 before the bank issued its policy statement to as high as US$1.2425. Against the pound, the euro was 0.13% lower at £0.8916 and fell 0.65% to Y130.81 versus Japan's yen.

The given reason for scaling back stimulus expectations was an improving outlook for Europe's economic growth and inflation rate.

Half an hour before the close of trade on Thursday, the EuroStoxx 50 was up 1.05% at 3,415.

Meanwhile, CAC 40 is up 18 points at 5,205.84, FTSE 100 Index is trading higher by 9 points at 7,166.64, while DAX Index is trading lower by 33 points at 12,212.71.

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