Federal Reserve Chair Janet Yellen and Draghi walk together during the Jackson Hole Economic Policy Symposium.
Your feedback is important to us!
We invite all our readers to share with us their views and comments about this article.
Disclaimer: Comments submitted by third parties on this site are the sole responsibility of the individual(s) whose content is submitted. The Daily Star accepts no responsibility for the content of comment(s), including, without limitation, any error, omission or inaccuracy therein. Please note that your email address will NOT appear on the site.
Alert: If you are facing problems with posting comments, please note that you must verify your email with Disqus prior to posting a comment. follow this link to make sure your account meets the requirements. (http://bit.ly/vDisqus)
FRANKFURT: In a high-stakes juncture for the global economy, the central banks of Europe and the United States are set to take opposing actions in December: the European Central Bank to cut rates, the Federal Reserve to raise them.The euro has fallen against the dollar since the ECB signaled last month that on Dec. 3 it would further trim interest rates or expand its monetary stimulus, both of which tend to weigh on a currency. At the same time, the Federal Reserve has been pushing the dollar higher by indicating it's likely to raise rates on Dec. 16 for the first time in nearly a decade.Andreas Rees, chief German economist at UniCredit Research, says a 10 percent decline in the euro – weighted against major trading partners, not just the U.S. – can boost GDP by 0.6-0.7 percent over 12 to 18 months. The trade-weighted euro has fallen 9 percent since shortly before the ECB unveiled its trillion-euro stimulus program in January. While the ECB says it does not target a specific rate for the euro, it's clear that it welcomes the currency's drop.
FOLLOW THIS ARTICLE