The President of the European Central Bank, Trichet told a news conference after the meeting of the institution that current levels of base rate are appropriate and recent economic data confirms this. At the meeting it was decided to maintain the rate of 1 percent, supported unanimously, he added. According to him, it was noted that good signals for economic stabilization and expects inflation to moderate in positive levels, and inflation stability will be maintained to support the private costs. Trichet said the moderate growth of loans maintain low inflation. In August the annual inflation rate was minus 0.2%. Economic recovery, although expected to be “uneven”, said President of the ECB. He warned that the risk to see if further recovery of tightening fiscal policy. Departure from current policies of fiscal stimulus must be made at a time when the recovery remain
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On a business forum in Barcelona, European Commission President Jose Manuel Barroso predicted that the world will be the same after pass this economic crisis. Barroso said that Europe will start to come out of the crisis in 2010 He said the continent should be made much effort to overcome the serious situation. Barroso for most of Europe’s main concern is unemployment. This is the main drama of European society. Barroso added that the European Union will show flexibility in terms of limit of 3 percent of GDP, which must not pass the budget deficits of member states of the Union.
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The UK economy has decreased by 5.6 percent in the second quarter of this year compared with the same period of 2008, forward Bloomberg, referring to the statistical office in the country. This is the strongest decline in 1955 when it started keeping official statistics. On a quarterly basis is reduced by 0.8% due to the decline in construction, lending and business services. It is recalled that economists expected the country’s GDP to decrease by 0.3 percent. Expectations of the International Monetary Fund is that the country will register economic slowdown from 4.2 percent at the end of this year. According to Andrew Sentans, Bank of England by the British economy will start to life in the second half of 2009
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The Eight major banks are already with profits in the U.S., which reported earnings in the second quarter of 2009 today to the group, which fell safe as Goldman Sachs and JP Morgan Chase joined Bank of America and Citigroup. The Bank of America reported profits of 3.2 billion dollars during April-June (or $ 0.33 per share) and revenues amounted to 33.1 billion dollars, which is 60 percent more. The results were better than expectations, according to which profits should be between 0.28 and 0.29 dollars per share. Last year in the second quarter was 0.72 dollars per share (or profit amounted to 3.41 billion dollars). The Net income of Bank of America for the period April-June increased by 9 percent to 11.9 billion dollars. Furthermore, the Bank announced that during the second quarter expanded loans to more than 211 billion dollars. Treasury announced that it added reserves (provisions) for credit losses amounted to 13.4 billion dollars. Citigroup results show a net profit of 3.1 billion dollars for the second quarter of 2009, or earnings of 0.49 dollars per share (compared to a loss of 0.55 dollars per share or net losses of 2.5 billion dollars in the second quarter of 2008 ). Bank earnings have amounted to 29.97 billions USD revenues to 17.54 billion dollars for the prior year.
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The Eurozone consumer prices decreased on an annual basis for the first time in June, which coincides with the prediction of the European Central Bank (ECB) says Finance.news, quoted by Eurostat. Core inflation has also declined by 0.1 percent in June after an earlier yearly inflation in 16 states, adopted the euro, was 4 percent. Time of ETSBK said it expected strong fluctuations in raw material prices last year would lead to a decline in inflation on a monthly basis for several months before it becomes positive again at the end of this year. Reiterated several times that the short-term movements in inflation should not be taken into account in monetary policy. The Economists are of the opinion that the fall in prices will lead to a prolonged period of deflation. Prices of fuel and transport decreased by 18.8% yearly base and for heating fuel fell by 39.3 percent.
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The Gold reserves of the European Central Bank, including claims in gold (physical gold, such as bars, coins, ingots, and storing pieces of monetary gold, as balances on accounts with gold) decreased by EUR8.5 billion to EUR232.128 billion during the week ended July 3, according to today’s report of the financial institution. The change primarily reflects the quarterly revaluation adjustments and reserves and selling gold to EUR5.0 million from a central bank in the euro area, indicating the report of the ECB. Foreign exchange reserves showed a net decrease of EUR10.5 billion to EUR206.2 billion for that period. ECB reported an increase of money in circulation in 16 EU member states of the euro by EUR6.6 billion to EUR768.7 billion.
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Italy’s central bank will buy bonds secured 10 billion euros as part of the European Central Bank for the purchase of bonds for a total of 60 billion euros, reported Reuters. Total program of 60 billion euros has been allocated among the 16 countries of the euro on the basis of their shares in the capital of the ECB. ECB President Jean-Claude Trichet said on Thursday that the bank will begin its emergency program to purchase secured by mortgage and public debt bonds of July 6, with a maturity of between three and 10 years. National central banks will make 92 percent of purchases under the program, which aims to increase the liquidity of banks and to promote credit flows. Each of the central banks of the euro area countries will come on the market as other investors who participate in bids when purchasing bonds on the primary market or secondary market. In the latter case the central bank will make an offer for a significant amount and will have to focus on securities that are sufficiently liquid.
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Only a month after the leaders of the G 20 meeting in Washington promised that it will not interfere with the free market with trade barriers, governments around the world start to help strapped to their industries at the expense of foreign competitors – Bloomberg agency said. This month, Russia raised the import duties on cars from 25% to 30%. China to introduce tax rebates for exporters. India introduced import quotas for steel. Like it was not enough, the U.S. considers state aid for carbuilding companies and France paid 7.6 billion dollars to protect national companies from foreign usurper. All this suggests that the global recession might lead to protectionism, which in turn is dangerous for the recovery of the economy in the world, but for sober reaction in times of crisis. Even the next day after having promised that he would defend the freedom of global trade, world leaders began to introduce measures to prevent it, says U.S. specialist. According to economic historians, the trade war during the Great Depression after the adoption of the Law Turmoil Hawley (set record-high import duties on goods 20.000 in 1930) has increased the global economic crisis.
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The President of the European Central Bank Jean Claude Trichet said that current levels of interest are adequate and recent economic data confirms this. Trichet said the decision to preserve the basic interest rate was unanimous, but can not believe that 1 percent is the minimum of interest on refunds. According to him, the economic slowdown will reduce the pace in the second half of the year and next year is expected positive economic growth. Trichet said that inflation expectations remain very limited and monetary analysis show that the medium is a time price stability. In his negative rates of inflation will be short, for the next few months. He stressed that short-term movements in inflation are not taken into account when taking political decisions. President of the ECB believes that pressure on prices has weak economic activity, as though inflation is derived from the growth of money, there is a clear monetary expansion. According to him the negative inflation of consumer prices for June is in line with the expectations of the ECB, in the medium term is possible rise of oil and other energy. Trichet reported that a decline in short-term loans, but banks have already “moved” low interest rates to consumers. Therefore, he expected an improvement in conditions in the financial sector, but banks need to strengthen its capital base.
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