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Markets: Trichet signals rise in interest rates in July; Changes for Greek bondholders must be 'absolutely voluntary'
By Finfacts Team
Jun 9, 2011 - 4:29 PM

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Jean-Claude Trichet, ECB president and Vítor Constâncio, ECB vice-president, at a press conference, Frankfurt, June 09, 2011.

Markets: Trichet signals rise in interest rates in July; Changes for Greek bondholders must be 'absolutely voluntary'

Jean-Claude Trichet, president of the European Central Bank, said today at a press conference following the decision of the governing council to keep interest rates on hold, that 'strong vigilance' was needed in response to inflationary pressures  -  a code for a plan to  to raise interest rates in July. On Greek debt, he made clear that any change in terms for bondholders must be 'absolutely voluntary.' 

“We are not in favour of restructuring, haircuts and so forth,” Trichet said. “We call for avoiding all credit events and selective defaults. We exclude all elements which are not voluntary.”

Trichet said the central bank does not have to "design anything" in reference to the ongoing discussions on a second bailout for Greece. "That is  a responsibility for governments."  

The ECB president stressed that the bank did not intend to see Greece default on its sovereign debt. There would be "no credit event, no selective default" by Greece

At today's meeting, the governing council had no objections to the proposed candidate for ECB president from Nov 1 next, Mario Draghi of Italy, "who is a person of recognised standing and professional experience in monetary or banking matters, as required by Article 283(2) of the Treaty on the Functioning of the European Union."

Trichet said that ECB staff forecasters had raised their forecast for Eurozone inflation this year to 2.6% from 2.3% and they foresee annual real GDP growth in a range between 1.5% and 2.3 % in 2011 and between 0.6 % and 2.8% in 2012. Compared with the March 2011 ECB staff macroeconomic projections, the range for 2011 has been revised upwards, while the range for 2012 remains broadly unchanged.

Introductory Statement

ECB Keeps Rate Unchanged: Volker Wieland, chair for Monetary Theory and Policy at the CSF, joined CNBC to discuss the European Central Bank's decision to keep its rates unchanged at 1.25%:

US Jobless Benefit Claims: The Department of Labor reported that in the week ending June 4, the figure for seasonally adjusted initial claims was 427,000, an increase of 1,000 from the previous week's revised figure of 426,000. The 4-week moving average was 424,000, a decrease of 2,750 from the previous week's revised average of 426,750.

The number for seasonally adjusted insured unemployment during the week ending May 28 was 3,676,000, a dip of 71,000 from the preceding week's revised level of 3,747,000. The 4-week moving average was 3,719,250, a decrease of 29,000 from the preceding week's revised average of 3,748,250.

US Markets

In New York Thursday, the Dow rose 88 points or 0.73% to 12,137.

The S&P 500 added 0.70% and the Nasdaq gained 0.30%.

Live US Indices

European Markets

The pan-European Dow Jones Stoxx 600 climbed 1.07% Thursday.

In Dublin the ISEQ has gained 1.03%.

IL&P has dropped 30% after the High Court directed the company to sell its key Irish Life business and the  value on the Irish Stock Exchange is down at €18 today.

CRH rose 1.41%; C&C added 3.16%.

European benchmarks

Irish share prices

Euribor Interest Rates

Commodities

Crude oil for July delivery is currently trading on the Chicago York Mercantile Exchange (CME/Nymex) at $101.27 per barrel up 53 cents from Wednesday's close. In London, Brent for July delivery is trading on the International Commodities Exchange at $118.18.

Currencies

The euro is trading at $1.4511 and at £0.8866.

Gold

Gold is trading at $1,545.70 per oz in New York.

The Finfacts Gold Page


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