Indeed, business activity in the euro zone picked up at its fastest pace since mid-2011 last month, third quarter economic growth was running at a respectable 1.6 percent and lending is increasing at the quickest rate in four years.
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But inflation across the eurozone is still stubbornly low, standing at just 0.1 percent in November, far below the ECB’s target of just under 2.0 percent.
And so analysts expect the programme to be increased and extended beyond September 2016. The ECB will use the new money to buy government bonds and other securities. Yahoo jumped $2.29, or 7 percent, to $36 on reports that the company was considering selling its core Internet businesses.
The Dow Jones Industrial Average fell 85 points, or 0.5%, to 17643.
The GBP/USD fell in sympathy with the Euro, taking out the week’s previous low at 1.4993. Germany’s DAX was down 0.2 percent while the CAC-40 in France was flat. A big rate cut could send the Euro plummeting further, potentially reaching parity with the dollar, while smaller than expected action might strengthen the currency.
The ECB said it further monetary policy decisions will be announced shortly by President Mario Draghi.
Learning from its past mistake of providing overly specific forward guidance, the bank could extend its asset purchases indefinitely, only dropping the end date without providing a new one, and could cut the deposit rate, again without providing an estimate for where the bottom is for rates.
Declines in the USA were smaller than in Europe as investors remained focused on the domestic economy, which has recovered enough for the Federal Reserve to consider raising short-term rates for the first time in almost a decade. ECB head Mario Draghi signaled that action is coming this week as the bank seeks to support growth and push inflation higher.
However, Craig Erlam, senior market analyst at OANDA, argues the opposite is the case. The Standard & Poor’s 500 index lost two points, or 0.1 per cent, to 2,100 and the Nasdaq composite was up 16 points, or 0.3 per cent, to 5,172.
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“I do not think Janet Yellen is going to disappoint the market”, Singh said, adding that a Fed rate hike will reverse any gains that the euro is making versus the USA dollar, thanks to today’s news. The 0.9% figure was down from the 1.1% recorded in the preceding month. That’s the second straight 0.1 percent decline and suggests that a rise in consumer demand earlier in the year may have run its course.
