January 13, 2006


ECB signals intention to raise rates (Ralph Atkins, January 12 2006, Financial Times)

The European Central Bank on Thursday signalled it was still on course to raise interest rates in coming months, despite Germany’s economy having apparently slowed sharply and unexpectedly. [...]

[Jean-Claude] Trichet’s comments, after the ECB’s rate-setting council held its main interest rate at 2.25 per cent, came just hours after Germany’s federal statistics office reported that growth in Europe’s largest economy fell well short of expectations in the last quarter of 2005. Johann Hahlen, the statistics office president, spoke initially of zero growth but that was later corrected to “below” the 0.4 per cent economists had expected.

“Broad and self-sustaining growth is still not being observed,” Mr Hahlen added. His pessimism surprised analysts, although they said the German economy might still show modest growth when the statistics office releases actual fourth quarter data. Overall, Germany grew by 1.1 per cent in 2005, the same as in 2004.

The weak German figures will underline the ECB’s determination not to commit itself to a series of interest rate rises, and Mr Trichet warned that the risks to the growth outlook “continue to lie on the downside” – a comment which was followed by the euro falling.

Posted by Orrin Judd at January 13, 2006 8:46 AM

Germanys economy having apparently slowed sharply and unexpectedly

Slowed sharply? Only if you think snails need to 'brake viciously' when turning a corner. Unexpectedly? Only if all you have been reading last year was www.spd.de.

Posted by: Daran at January 13, 2006 9:38 AM

Unexpectedly? When you burden your productive citizens and the industries they work for with high taxes and onerous regulation in order to support a growing class of pensioners and drones and the economy tanks you are surprised?

Only in Europe, I see.

Posted by: Mikey at January 13, 2006 10:36 AM

Germany is even more boring than Canada.

Posted by: erp at January 13, 2006 11:20 AM

Except that when it isn't it isn't in spectacular ways. The Canucks will go quietly to the grave, the Krauts will take others with them....

Posted by: oj at January 13, 2006 11:40 AM

oj. You're right about the Canucks, but the some west coast folks seem to like what we're selling. To quote the "Price is Right," Come on down.

Posted by: erp at January 13, 2006 4:56 PM

to hell with the germans. they always were ignorant savages. and it's not like they are producing beethovens or bachs any longer. the fatherland will make a nice wilderness preserve.

Posted by: toe at January 14, 2006 8:56 PM