Going up ...

2005-09-13T065756Z_01_NOOTR_RTRIDSP_2_OFRBS-FRANCE-PRIX-DETAIL-BS-20050913.jpgThis is of course pretty much as expected and given the recent figures of services in the Eurozone which came out earlier this week Trichet might feel just a bit relieved. Not to speak about the recent flurry about demands in Germany for higher wages.

'At today’s meeting the Governing Council of the ECB took the following monetary policy decisions:

The minimum bid rate on the main refinancing operations of the Eurosystem will be increased by 25 basis points to 3.50%, starting from the operation to be settled on 13 December 2006.

The interest rate on the marginal lending facility will be increased by 25 basis points to 4.50%, with effect from 13 December 2006

The interest rate on the deposit facility will be increased by 25 basis points to 2.50%, with effect from 13 December 2006.'

I will properly have more to say about this at some point but since I am working hard with the exams at the moment I will just leave you with the small yet important point as I believe that what is going on here at the ECB is what is really driving the dollar down at moment (i.e. expectations on interest differentials) and not some underlying tide which will continue and re-balance the imbalances. After all, there is a ceiling for how far the ECB can go here and we might sooner or later find out where that is.

Eurozone watchclaus vistesen