The European Central Bank (ECB) kept interest rates at 1 per cent yesterday as tentative signs of life emerge in the euro zone's troubled economy.
While the bank decided to keep rates on hold, policymakers left the door open for a further cut.
"It's a wait-and-see mode but does not mean they are done with the interest rate cycle," said Nick Matthews, a senior European economist at Royal Bank of Scotland. "We don't expect 1 per cent to be the floor and there's room for a further cut in the future."
The ECB's announcement in Frankfurt came after markets received a lift from successful bond sales by Spain and Italy earlier in the day. Both countries borrowed money at sharply lower costs.
The Spanish treasury raised €10 billion (Dh46.8bn) from the auction of three bonds, double its target of up to €5bn.
Yields dropped by about 1 percentage point. Italy paid less than half the amount it spent a month ago to sell one-year bills at its first auction of the year.
The FTSEurofirst index of top European shares gained about 0.5 per cent to 1,027.60 after news of the auctions. The euro also strengthened. More positive signs have emerged from the euro-zone economy.
Data this week showed German exports jumped 2.5 per cent, indicating the bloc's largest economy is still motoring.
But economists say it is still too early for the ECB to change tack as Greece remains locked in crisis and other countries falter.
Germany's economy contracted by 0.25 per cent in the fourth quarter, the country's statistics centre estimated on Wednesday.
The ECB has already taken a mix of policy actions in recent months. Last month, it offered banks extended loans, eased borrowing rules and pushed ahead with buying government bonds.
In addition, under its new president, Mario Draghi, it has delivered back-to-back cuts to put interest rates at a record low.
However, analysts still expect interest rates to be lowered in the coming months. Rates have never gone below 1 per cent, even during the 2008 global financial crisis.
Yesterday, the ECB said it would keep the interest rate on its deposit facility at 0.25 per cent and the rate on the marginal lending facility at 1.75 per cent. The Bank of England also left monetary policy on hold.
The central bank's rate-setting monetary policy committee agreed to leave the bank's key interest rate at a record low 0.5 per cent.
But with the economy faltering, the bank is expected to provide more stimulus in the form of additional bond buys soon.
Calls yesterday for united action to foster growth across the EU came from Enda Kenny, the Irish prime minister. Ireland had been in the eye of the storm of the euro-zone crisis until it received a financial bailout.
A new treaty to tighten budget controls drafted by European leaders last month was not sufficient on its own to achieve progress, he said at an event in London.
European leaders agreed to draft a new treaty to increase budget controls in the euro zone last month, but while this represents significant progress it is not sufficient on its own, Mr Kenny said.
"Clearly we are not yet at a point where market confidence in the euro has been restored.
"We must ensure that more binding, durable and enforceable fiscal rules go hand-in-hand with funding certainty for countries pursuing sound and sustainable economic policies," he said.
* With Reuters and Dow Jones
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Transmission: eight-speed automatic
Power: 582bhp
Torque: 730Nm
Price: Dh649,000
On sale: now
The Perfect Couple
Starring: Nicole Kidman, Liev Schreiber, Jack Reynor
Creator: Jenna Lamia
Rating: 3/5
EMERGENCY PHONE NUMBERS
Estijaba – 8001717 – number to call to request coronavirus testing
Ministry of Health and Prevention – 80011111
Dubai Health Authority – 800342 – The number to book a free video or voice consultation with a doctor or connect to a local health centre
Emirates airline – 600555555
Etihad Airways – 600555666
Ambulance – 998
Knowledge and Human Development Authority – 8005432 ext. 4 for Covid-19 queries
Israel Palestine on Swedish TV 1958-1989
Director: Goran Hugo Olsson
Rating: 5/5
The specs
Engine: 2-litre or 3-litre 4Motion all-wheel-drive Power: 250Nm (2-litre); 340 (3-litre) Torque: 450Nm Transmission: 8-speed automatic Starting price: From Dh212,000 On sale: Now
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Company profile
Date started: January, 2014
Founders: Mike Dawson, Varuna Singh, and Benita Rowe
Based: Dubai
Sector: Education technology
Size: Five employees
Investment: $100,000 from the ExpoLive Innovation Grant programme in 2018 and an initial $30,000 pre-seed investment from the Turn8 Accelerator in 2014. Most of the projects are government funded.
Partners/incubators: Turn8 Accelerator; In5 Innovation Centre; Expo Live Innovation Impact Grant Programme; Dubai Future Accelerators; FHI 360; VSO and Consult and Coach for a Cause (C3)
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How to help
Send “thenational” to the following numbers or call the hotline on: 0502955999
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Countdown to Zero exhibition will show how disease can be beaten
Countdown to Zero: Defeating Disease, an international multimedia exhibition created by the American Museum of National History in collaboration with The Carter Center, will open in Abu Dhabi a month before Reaching the Last Mile.
Opening on October 15 and running until November 15, the free exhibition opens at The Galleria mall on Al Maryah Island, and has already been seen at the Jimmy Carter Presidential Library and Museum in Atlanta, the American Museum of Natural History in New York, and the London School of Hygiene and Tropical Medicine.