Euro Stable Around 1.52, ECB Rate Decision Looms
Though holding near its record highs against the US dollar and British pound, the euro closed its Friday session little changed from where it opened.
The calendar submitted measures of both economic activity and inflation for ECB President Jean Claude Trichet and his fellow rate setters to consider at next week’s monetary policy meeting. Adding weight to ECB Member Weber’s comments earlier this week that those betting on an interest rate cut were underestimating inflation, the German and Euro Zone headline CPI numbers kept the hawkish pressure on. According to the German consumer inflation gauge, annual price growth held at 2.8 percent for a third consecutive month through February – just off of the recent record high set in November. The region wide report, on the other hand, was a little more interesting. Headline inflation met expectations of a modest acceleration to a record high 3.2 percent annualized rate. However, in stark contrast, the core price gauge unexpectedly slipped to its slowest pace in a year. This divergence between readings is a clear reflection of soaring food and energy prices and the lack of notable pressures in most other groups. Consumer spending, the backbone of growth, was also a mixed bag. A 1.6 percent jump in German retail sales was the first increase in four months, though it was largely won on temporary promotions. Altogether today’s data did little to clear up the outlook for European monetary policy over the coming months.