Bundesbank keeps rein on rates
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.THE BUNDESBANK disappointed financial markets yesterday, leaving all its main interest rates unchanged and giving the impression that a significant further relaxation of monetary policy may fail to materialise, writes Peter Torday.
In London, the dollar closed more than a pfennig down at DM1.5456 and dropped more than a yen to Y98.99. Against the pound, the dollar fell half a cent to dollars 1.5445. The decline was also fuelled by a larger than expected US trade deficit of dollars 9.37bn ( pounds 6bn) in June, swollen by record oil imports and large rises in imports of industrial supplies, cars and capital goods. The deficit with Japan widened further.
Speculation persists that the Bundesbank will cut rates again, though some analysts now expect only a quarter-point reduction. Hopes are also fading that the repo rate will come down. Jouni Kokko, international economist at Warburg Securities, said: 'The decision reinforces the view that if we have (a cut) it will be technical rather than a genuine relaxation.'
The decision came despite a slight slowdown in money supply growth, with M3 expanding by an annualised 10.3 per cent in July.
German bund prices finished little changed but US Treasury bonds were shaken yesterday, falling more than half a point after fresh evidence of inflationary pressures. A Philadelphia Federal Reserve Bank index showed a sharp jump in consumer prices.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments