50% Chance of ECB Rate Hike Next Month, Bank of Japan Leaves Rates Unchanged
August 23, 2007
European Central Bank
The European Central Bank said in a press release that even though they continue to inject liquidity into the financial system:
The position of the Governing Council of the ECB on its monetary policy stance was expressed by its President on 2 August 2007
**And if you remember, this position was to raise interest rates. This was when Trichet reintroduced the words “strong vigilance” into his vocabulary. Rate hike expectations have jumped from 0% back up to 50%.
Bank of Japan
Japan also left interest rates unchanged, which carry traders are taking positively. The vote was 8-1 with Mizuno dissenting. Although no one really listens to Fukui these days, he did say that rate normalization will continue regardless of liquidity situation. The Nikkei jumped 400 points overnight.
**Therefore it is not a surprise to see EUR/JPY up 1.00 percent this morning.
Posted in Bank of Japan, Carry Trades, ECB, Forex News, Japanese Yen, Nikkei, euro
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