ECB is urged to intervene as euro surge threatens growth
Leading European finance ministers are today expected to pile the pressure on the European Central Bank to intervene to prevent the surge in the euro from pushing the Continent back into recession.
Hopes of co-ordinated intervention have been boosted by news that Jean-Claude Trichet, the president of the ECB, and Alan Greenspan, his counterpart of the US Federal Reserve, are meeting later this week.
Finance ministers from the 12 members of the euro meet today against the background of Friday's figures showing that GDP growth slowed to a 15-month low in the autumn.
They are also likely to hint at the need for cuts in interest rates to stimulate domestic demand in the economy, which posted GDP growth of just 0.3 per cent in the three months to September.
"The strength of the euro and high oil prices continue to cause concern about economic prospects for the eurozone," Tom Levinson, an economist at ING Financial Markets, said.
"Politicians are particularly keen to see the euro weaken, and pressure on the ECB to take action could intensify with the euro's strength likely to be a key discussion point at the finance ministers' meeting."
Analysts said that the euro, which has swung between $1.28 and $1.30 against the dollar in recent days, would suffer more volatility as the market gauged the likelihood of currency intervention.
The ECB has already voiced some concerns over the euro's rise, with Mr Trichet and other members of its governing council calling it "brutal" and "unwelcome".
Analysts at Goldman Sachs said they did not expect intervention unless the euro hit $1.40, which would mark a 16 per cent rise since early September.
However, they said that with inflation above target the ECB might see euro strength as a "necessary evil" to quash inflationary pressures. "Even if it is not enough to warrant a cut in rates, currency strength adds to our conviction that monetary policy is on hold until well into the second half of 2005," Dirk Schumacher, one of its European economists, said.
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Sony hack: Angelina Jolie branded 'seriously out of her mind' in further embarrassing leaked email saga
Panic Saturday: 13 million Britons spend £1.2bn – while 13 million others across the country live in poverty unable to afford food
iJobs Money & Business
$200 - $350 per annum: Carlton Senior Appointments: Managing Producer Office...
$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...
Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...