The European Central Bank and the Bank of England will leave rates on hold for the 11th month in a row following meetings today. The ECB will hold its benchmark rate at 3.25pc, while UK policymakers will leave rates at their 38-year low of 4pc, analysts say. In a speech earlier this week, ECB president Wim Duisenberg all but told the market that rates would not be lowered, stating once again that monetary policy is at an "appropriate" level.
Yesterday, August German industrial output surged unexpectedly, but economists say the market should not infer from this from this that the recovery in Europe's largest economy is now on firmer ground. "We note that there was a particularly large fall in the output index of the manufacturing PMI in September so it would be a surprise if the official numbers did not slip back next month," said Simon Barry, economist at Bank of Ireland Treasury. "Also, the news from the rest of the zone still reflects soggy demand and activity."
The eurozone's manufacturing PMI fell to a four month low last month, while the services index dropped below the key 50 mark, indicating that the sector contracted. //www.fxcentre.com