Reuters - Video

Edition: US | UK | IN | CN | JP

Finance Videos

Will euro zone stumble mean rate cut?

Tuesday, November 05, 2013 - 01:37

Nov. 6 - The pace of the recovery in euro zone private sector business eased slightly last month while job losses mounted. As Hayley Platt reports it all adds to the pressure on the ECB which meets on Thursday.

▲ Hide Transcript

View Transcript

They're not as busy as they were - at least that's the picture across Italy and Spain when it comes to the service industry. Markit's latest survey which covers everything from cafes to banks dampened recent optimism over a euro zone recovery. France and Germany saw modest growth in private sector activity but not enough to ease pressure on the ECB to reinvigorate the economy. Ian Stannard from Morgan Stanley says the high value of the euro isn't helping either. SOUNDBITE: Ian Stannard, Head of FX Strategy, Morgan Stanley, saying (English): "If we look at the fair value of the euro throughout the euro zone countries, we see that at current levels, Germany is one of the very few countries which can cope with the euro at this current level." The ECB is expected to resist pressure for an interest rate cut even though inflation also dropped to near four year lows. It's currently 0.7% well below the bank's 2% target. Peter Dixon is an economist at Commerzbank. SOUNDBITE: Peter Dixon, Economist, Commerzbank, saying (English): "I still don't think that this is going to be sufficient to trigger a rate cut, for one, I think there are certain members on the ECB council who think that rates are already low enough and arguably are already too low for the situation in Germany and secondly I think there is a general realisation that further rate cuts just won't help." The latest surveys also show companies trimmed prices last month and, perhaps most worryingly of all, were cutting jobs at a faster rate. With euro zone unemployment for September already at a record 12.2 percent - that's also likely to be closely watched.

Press CTRL+C (Windows), CMD+C (Mac), or long-press the URL below on your mobile device to copy the code

Will euro zone stumble mean rate cut?

Tuesday, November 05, 2013 - 01:37