March 5, 2010
-- Analysts from Tortola Capital report that the European Central Bank will announce that special lending to banks introduced during the financial crisis will be decreased, even though recovery from the recession is appearing to be weaker than initially hoped. Tortola analysts also report that as a result of Greece’s fiscal woes, the ECB will keep its benchmark interest rate at a shockingly low one percent for the remainder of this year.
Though Greece has been hanging like a cloud above the European economy and economic policy-making, "Greek default can be avoided but the ECB has gone from the front of the queue to raise rates to the back," reports Henry J. Marshall, President and CEO of Tortola Capital, citing Kit Juckes, chief economist at ECU Group. Trichet is expected to confirm that special liquidity measures introduced to prop up the banking system during the financial crisis and the recession will continue to be wound down.
Tortola analysts predict that he will confirm that the upcoming auction of 6-month credits on March 31 will be the final operation and that the interest rate charged for shorter-term loans will be increased. The central bank introduced a range of cheap liquidity operations when the financial crisis first exploded to allow the commercial banks to have access to money at a time when the credit markets had seized up.