Financial markets will be keen to hear this week if the European Central Bank (ECB) plans changes to its exceptional measures to underpin lending amid mixed signals on the global economy.
The ECB’s main interest rate will likely stay locked in at a record low of 1 percent on Thursday as the central bank releases its latest forecasts for growth and inflation in the 16-nation bloc.
The bank “has absolutely no reason to raise interest rates,” Capital Economics senior European economist Jennifer McKeown said.
Eurozone inflation stood at 1.7 percent last month, comfortably below the ECB’s target of just under 2 percent, and should edge lower this month owing to cheaper energy costs compared with a year ago.
The ECB’s headline interest rate is identical to that of the Bank of Japan, while the Bank of England’s benchmark rate is 0.5 percent and the US Federal Reserve has kept its Fed funds rate at virtually zero.
Back in the eurozone, although Germany saw record growth in the second quarter and the region as a whole did better than Japan or the US, countries on the periphery seemed to be falling behind.
The Greek economy contracted further, Portuguese and Spanish recoveries remained timid and Ireland’s downgraded sovereign credit rating reminded investors the battle against deficit and debt was not over.
The price that peripheral countries must pay to borrow money has widened again compared with benchmark German bonds and a controversial ECB program to buy sovereign debt slipped back into low gear last week after coming almost to a halt.
Household credit conditions are improving however and consumer confidence is getting stronger as labor markets improve, but corporate lending remains tight and business activity lost a bit of momentum this month.
Against that uncertain backdrop, analysts expect the ECB to raise its current growth forecast of 1 percent for this year, but are divided with respect to what the bank’s outlook for next year will be.
TYPHOON: The storm’s path indicates a high possibility of Krathon making landfall in Pingtung County, depending on when the storm turns north, the CWA said Typhoon Krathon is strengthening and is more likely to make landfall in Taiwan, the Central Weather Administration (CWA) said in a forecast released yesterday afternoon. As of 2pm yesterday, the CWA’s updated sea warning for Krathon showed that the storm was about 430km southeast of Oluanpi (鵝鑾鼻), Taiwan’s southernmost point. It was moving in west-northwest at 9kph, with maximum sustained winds of 119kph and gusts of up to 155kph, CWA data showed. Krathon is expected to move further west before turning north tomorrow, CWA forecaster Wu Wan-hua (伍婉華) said. The CWA’s latest forecast and other countries’ projections of the storm’s path indicate a higher
SLOW-MOVING STORM: The typhoon has started moving north, but at a very slow pace, adding uncertainty to the extent of its impact on the nation Work and classes have been canceled across the nation today because of Typhoon Krathon, with residents in the south advised to brace for winds that could reach force 17 on the Beaufort scale as the Central Weather Administration (CWA) forecast that the storm would make landfall there. Force 17 wind with speeds of 56.1 to 61.2 meters per second, the highest number on the Beaufort scale, rarely occur and could cause serious damage. Krathon could be the second typhoon to land in southwestern Taiwan, following typhoon Elsie in 1996, CWA records showed. As of 8pm yesterday, the typhoon’s center was 180km
TYPHOON DAY: Taitung, Pingtung, Tainan, Chiayi, Hualien and Kaohsiung canceled work and classes today. The storm is to start moving north this afternoon The outer rim of Typhoon Krathon made landfall in Taitung County and the Hengchun Peninsula (恆春半島) at about noon yesterday, the Central Weather Administration (CWA) said, adding that the eye of the storm was expected to hit land tomorrow. The CWA at 2:30pm yesterday issued a land alert for Krathon after issuing a sea alert on Sunday. It also expanded the scope of the sea alert to include waters north of Taiwan Strait, in addition to its south, from the Bashi Channel to the Pratas Islands (Dongsha Islands, 東沙群島). As of 6pm yesterday, the typhoon’s center was 160km south of
STILL DANGEROUS: The typhoon was expected to weaken, but it would still maintain its structure, with high winds and heavy rain, the weather agency said One person had died amid heavy winds and rain brought by Typhoon Krathon, while 70 were injured and two people were unaccounted for, the Central Emergency Operation Center said yesterday, while work and classes have been canceled nationwide today for the second day. The Hualien County Fire Department said that a man in his 70s had fallen to his death at about 11am on Tuesday while trimming a tree at his home in Shoufeng Township (壽豐). Meanwhile, the Yunlin County Fire Department received a report of a person falling into the sea at about 1pm on Tuesday, but had to suspend search-and-rescue
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