A key measure of German business optimism fell in April, suggesting Europe's biggest economy might not be rebounding as expected and likely putting more pressure on the European Central Bank to cut interest rates. The Germany economy has shrank 0.6% in the last three months of 2012, and most growth expectations this year have been shaken this week by a weak survey of activity in the manufacturing sector. A slowdown in its economy, which accounts for 28% of the currency bloc's total output, would make it harder for the region to climb out of recession. It could make officials at the European Central Bank more inclined to cut interest rate to support growth. However, another cut from the record low of 0.75% would not accomplish much. Rates are already low but the cheap financing is not reaching many companies because troubled banks in some parts of the eurozone are reluctant to lend. Therefore, it is unlikely to see another reduce in interest rates from European Central Bank.
Source: http://www.miamiherald.com/2013/04/24/3361626/key-german-index-falls-more-than.html
2 comments:
I agree that lowering rates will not help. The problem is partly economic in that many eurozone nation still have too much debt on their books but another problem is banks are hesitant to lend and individuals and business are hesitant to borrow. If this mindset can change then economic growth will pick up.
I agree that lowering rates will not help. The problem is partly economic in that many eurozone nation still have too much debt on their books but another problem is banks are hesitant to lend and individuals and business are hesitant to borrow. If this mindset can change then economic growth will pick up.
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