Weaker Euro Retail Sales

A 1.1 percent decline in Eurozone retail sales is the latest indicator to suggest the Eurozone economy is likely entering a weak period – the fact that Germany led the way in taking retail sales lower is cause for outright concern. If the Eurozone’s dominant economy is indeed weakening, this could lead to a shift in tone from the region’s central bank.

For the past two months European Central Bank officials have raised expectations of a rate hike with President Jean-Claude Trichet all but committing to a rate hike later this month with more to follow. This latest result, however, could force the Bank to rethink its position.

“As signs of an economic slowdown pile up, we continue to think that, while the ECB will deliver an interest rate hike this week, it is likely to hold off from hiking rates further this year and probably for the most part of 2012 as well,” said Emilie Gay, European economist at Capital Economics.

Source: The Canadian Press

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