The shekel has strengthened by 1.08% against the euro to NIS 4.7278/€, and stocks in Tel Aviv are rising in line with world markets, after the European Central Bank (ECB) surprisingly cuts its interest rate today. The ECB lowered the euro bloc rate by 25 basis points to 0.25%. The move came as a surprise even though a few analysts (including just 3 of the 70 surveyed by Bloomberg) had said that ECB president Mario Draghi, might cut the rate because of the low inflation rate in the Eurozone, below the ECB's target rate of 2%. Inflation in October was at 0.7%.
The euro has weakened by more than 1% against the US dollar, to $1.337/€. European bourses switched from losses to gains of up to 0.4%, and futures contracts on Wall Street point to gains there as well.
Following today's cut, the Eurozone interest rate is at its lowest ever, as the ECB tries to boost economic growth and bring down employment, which is stuck at its highest level since the euro was launched in 1999.
Also today, the Bank of England announced that its interest rate would remain unchanged at 0.5%, and that it would continue with its quantitative easing program.
Published by Globes [online], Israel business news - www.globes-online.com - on November 7, 2013
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