
Today is
the Fourth of July, so a very Happy Independence Day to all our friends from
and in the USA .
It also
happens to be ECB day, when the European Central Bank will announce its policy
decisions and conduct its monthly press conference where Mario Draghi,
President of the ECB, will explain policy decisions and answer questions.
The big
one, of course, concerns whether or not the key refinancing interest rate in
the Euro zone will be lowered. There is scope for this. The primary objective
of the ECB is price stability, in other words the control of inflation, and it
takes this requirement very seriously. Its aim is an inflation rate that is “close
to, but not above, 2.0%”. Right now it stands at 1.6%.
However, it
also has a role in the support of economic activity, with a particular focus on
employment throughout the zone. And the situation here is not good. The average
unemployment rate throughout the bloc of countries that use the Euro now stands
at a record 12.1%. Recall the gloom that descended on the U.S. when the
rate went above 10%?
But here's the thing. Due to the holiday in the U.S., trading will be on the thin side. This means that any announcement from the ECB has the potential to create more multi-directional volatility than might otherwise be the case. Be careful out there.
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