Published: Sat, March 10, 2018
Economy | By

European Central Bank holds interest rates steady

European Central Bank holds interest rates steady

The German DAX 30, though, tumbled by 0.52% with all sectors being in the red except technology and industrials. In China, the Shanghai Composite is up 0.4%, while the Hang Seng index in Hong Kong is up 1.4%. Looking ahead, on the basis of current futures prices for oil, annual rates of headline inflation are likely to hover around 1.5 percent for the remainder of the year.

What was driving the market?

After rising sharply at the start of the year to hit a three-year high of $1.2556 in February, the euro has been stuck in a range in recent weeks as the dollar alternately rose and sold off depending on global risk appetite.

But in the end, ECB President Mario Draghi delivered the change in language, which marked a small but significant step toward scaling back its large monetary stimulus, . The euro's fall paved the way for stocks to scramble higher.

"We forecast the European Central Bank to drop its bias to increase asset purchases in size, if necessary, in April", Berenberg economist Florian Hense said.

Traders were waiting to see if the rate setters would remove that particular bit, as it could indicate the end of QE is moving closer.

It also raised its growth forecast to 2.4 per cent for 2018, up from 2.3 per cent it expected in December.

The interest rate on the main refinancing operations, the marginal lending facility and the deposit facility remained unchanged at zero, 0.25% and -0.4% respectively.

Premier Global Alpha Growth manager Jake Robbins described the removal of the reference to the bond-buying programme's possible extension as "slightly unexpected", although added protectionism still weighed on European Central Bank monetary policy.

The past week has seen an escalation of the threat of a trade war after the US announced plans for tariffs on steel and aluminium, and some of the biggest trade partners threatened retaliation. The resignation of Cohen has been seen as a sign that the White House intends to follow through with the imposition of its tariffs on steel and aluminum, despite nearly universal opposition from trading partners and indeed Republicans in Congress. Visit for more information on this news. In Europe, the Stoxx 600 Index was 0.2% higher at 5:45 am in quiet trading as markets await the European Central Bank decision.

Policymakers were not yet ready to declare victory on inflation, Draghi said.

Which stocks were in focus? Atlantia, which confirmed preliminary talks with ACS over Abertis, gained 5.1 per cent, while Abertis fell 4 per cent. Shares in Hochtief, which had also bid for Abertis, rose 7.3 per cent.

Casino Guichard-Perrachon SA (CO.FR) fell 3.7% after the French retailer posted a sharp drop in 2017 profit (

Britvic PLC (BVIC.LN) jumped 6.2% after Morgan Stanley upgraded the soft drinks maker's rating to overweight from equalweight. Asian shares have tracked the U.S. higher.

The selloff in United States stocks that was sparked by the resignation of Gary Cohn turned out to be very short-lived, with the S&P 500 Index finishing yesterday's session broadly unchanged after dropping as much as 1% earlier.

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