Forex market news:Market is estimated at more balanced approach to the ECB tightening

The sharp rise was obtained in January, so that the president of the ECB at the press conference made it clear that his work is done. By the way, his statement was more stringent, but the changes were not so significant that the market reacted to them. For inflation, it predicts excess of 2% "for much of 2011, whereas previously he had seen" the weakening of the end of the year. "
Another change was related to the prices of raw materials and energy, adding that "this pressure is also evident in the early stages of the production process." In other words, it was similar to January with the addition of his speech-writer, it seems, is to take a couple of weeks of vacation. As the euro Bole than 2% from mid-January, the normalization of money markets and the strengthening of 2-year rates by 25 percentage points (while remaining at 100 bps above the benchmark), financial conditions have actually tightened.

The reaction of the forex market and market interest rates reflects the fact that the market ran ahead of expectations of further tightening of rhetoric in response to higher inflation data from the last meeting. Most likely this year will be higher levels, but at the current divergence in the economic and financial conditions in the eurozone, the ECB is right, taking a more cautious approach.

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