Coeure: rates to diverge from UK, U.S. for years
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[June 07, 2014]
By James Regan and Yann Le Guernigou
PARIS (Reuters) - Euro
zone interest rates will diverge from those in the
United States and Britain for a number of years,
European Central Bank (ECB) Executive Board member
Benoit Coeure told France Inter radio on Saturday.
Speaking after the ECB this week cut rates to record lows, Coeure
said they would remain around that level for a long time, whereas
central banks in the United States and UK would at some point raise
"Clearly what we wanted to indicate on Thursday is the fact that
monetary conditions will diverge between the euro zone on one hand
and the United States and the United Kingdom on the other for a long
period, which will be several years," he said.
"We are going to keep rates close to zero for an extremely long
period, whereas the United States and the United Kingdom will at
some point return to a cycle of rate rises."
Coeure said this should help to weaken the strong euro, which is
threatening economic recovery and importing disinflation. French
President Francois Hollande has been calling for months for ECB
action to weaken the currency.
The ECB on Thursday lowered its main refinancing rate to 0.15
percent and launched a series of measures to pump money into the
sluggish economy, pledging to do more if needed to fight off the
risk of Japan-like deflation.
The Bank of England this week left its benchmark interest rate at
0.5 percent - where it has sat since the worst of the financial
crisis more than five years ago - despite a strong recovery and
fast-rising house prices.
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Forecasts from the Bank published in May showed gradual interest
rate rises starting in about a year's time would be consistent with
its 2 percent inflation target. Martin Weale, the Monetary Policy
Committee member most likely to cast a first vote for a rate hike,
said recently that borrowing costs should go up sooner rather than
The U.S. Federal Reserve, meanwhile, is not expected to raise rates
until July 2015, based on CME FedWatch, which tracks rate hike
expectations using its Fed funds futures contracts.
(Editing by David Holmes)
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