Columbia Threadneedle: ECB leaves interest rates unchanged despite strong euro
Gary Smith, Head of EMEA Client Portfolio Manager Fixed Income at Columbia Threadneedle Investments, comments on this week's ECB meeting:
'The European Central bank is expected to keep interest rates on hold this week, for its fifth straight meeting. This is even though the Euro recently touched a four-and-a-half year high of 1.20 against the US dollar. The Euro's recent gains may prompt discussion on whether the key deposit rate might be cut from its current level of 2%, but not until later in the year.
However, we would highlight that this currency strength for the Euro is mostly due to a broad-based weakening of the US Dollar on issues such as concerns about the future independence of the Federal Reserve. It is worth noting that although a stronger Euro is a challenge for export industries, it does also provide a boost to household spending power.'