Uneven Recovery In Europe Tale of Two Speeds

The uneven economic recovery in Europe is leaving central bankers with very different challenges.
The European Central Bank is facing calls for more action to stimulate activity, while the Bank of England tries to figure out how to react to a recovery that is racing forward.

Both central banks kept interest rates unchanged Thursday.

Neither was expected to make a move but the ECB made clear it may have more work to do. It cut rates to a record low of 0.25% in November, alarmed by a sharp fall in inflation and the risk that the eurozone recovery could be derailed before it started.

The bank then sat on its hands in December, but ECB president Mario Draghi used stronger language Thursday, warning it was premature to declare victory in the eurozone crisis.
“We will act if we have reason to think that our medium-term expectation for inflation is changing for the worse,” he said at a news conference.

The eurozone economy is at risk of stagnation after emerging from its longest recession last year.

via CNN

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza