Spain lifts its key rate
Thursday 05 January 1995
Although the devaluers within the old exchange rate mechanism, including Britain, Italy and Spain, are well ahead of countries such as Germany and France in the cycle of market tightening, the evidence is mounting of pressures building across the board.
The recent decision by the French commercial banks to lift short-term lending rates, while partly technical, was seen by analysts as recognition of the tightened conditions.
"In a general climate that is more and more inflationary, or inflation-conscious, it is difficult for countries such as France, where the fundamentals are good, to stay put for too long," said Didier Maillard, chief economist at Paribas.
Three-month money rates have moved up quite significantly in recent months, including those in France and Germany, suggesting the markets are discounting rate increases across the board.
The Bank of Spain said the rate rise from 7.35 per cent to 8 per cent was necessary to catch the inflationary effects of a VAT increase, as well as reacting to the weakened peseta. In Germany, Hans Tietmeyer, president of the Bundesbank, sought to persuade markets that inflation worries were overdone, while sending a stiff warning to the unions that the persistence of this positive situation depended on moderate settlements in the wage round.
He said the central banks council carefully assessed the results of the wage round in view of the effects on the whole economy and price stability.
With unemployment still high, analysts expect the outcome of the negotiations, which begin in earnest next month, to average 3 per cent, in line with productivity increases, and so neutral for Bundesbank policy.
- 1 Arizona shooting: Gun instructor accidentally killed by nine-year-old girl with Uzi
- 2 Paul Scholes: Manchester City were so good against Liverpool I felt like turning the television off
- 3 Notting Hill Carnival: Woman shares selfie after being ‘punched in face for telling man to stop groping her’
- 4 Homer Simpson has taken the ALS ice bucket challenge because of course he has
- 5 Do you realise just how foolish the UK looks?
Kensington flat branded ‘uninhabitable’ by estate agent on sale for a bargain £600,000
Miley Cyrus' homeless MTV VMAs date, Jesse Helt, is wanted by the police
Arizona shooting: Gun instructor accidentally killed by nine-year-old girl with Uzi
Notting Hill Carnival: Woman shares selfie after being ‘punched in face for telling man to stop groping her’
Teenager dies after suspected ice bucket challenge goes horribly wrong
Exclusive: We share blame for creating 'jihad generation', says Muslim strategist
Robin Williams Emmys tribute led by Billy Crystal criticised for including 'racist' joke about Muslim woman
The Rotherham child abuse scandal is a tale of apologists, misogyny and double standards
Scottish independence TV debate: Pumped-up Alex Salmond bounces back in bruising second round against Alistair Darling
Do you realise just how foolish the UK looks?
Jeremy Clarkson is a cultural tumour and needs to be removed, says comedian Frankie Boyle
- < Previous
- Next >
iJobs Money & Business
£40000 - £48000 per annum + benefits+bonus+package: Harrington Starr: C# Devel...
£45000 - £60000 per annum + benefits+bonus+package: Harrington Starr: C# Swift...
Negotiable: Harrington Starr: A fast growing Financial Services organisation b...
£50000 - £60000 per annum + excellent benefits: Harrington Starr: An award-win...