By Trang Nguyen, THETAKEAWAY: European Central BankHolds Key Rate at 1.5 percent > Speculation on additionalmonetary supply increased > Reactions inthe Euro mixed At the European Central Bank meeting today, the Governing Council decided to leave key interest rate unchanged at 1.5 percent for two consecutive months after lifting interest rate from 1.25 percent in July to curb inflation. ECB’s benchmark rate decision matched with the median projections from Bloomberg survey. Eleven of fifty two economists polled by Bloomberg expected an interest rate cut by at least a quarter-percentage point while the majority anticipated no change. While Eurozone has been struggling to boost regional economic growth and prevent debt crisis from spreading, its inflation remained very high. Economic activity in 17-nation region expanded merely 0.2 percent in the second quarter of this year compared to 0.8 percent in the first quarter. Regardless, latest data showed that the Eurozone’s consumer price index rose to 3 percent in September, well above the regional inflation rate target. EUR/AUD 1-minute Chart: October 6, 2011 Charts createdusing Strategy Trader – Prepared byTrang Nguyen Intensified sovereign debtcrisis in recent weeks and “particularly high uncertainty anddownside risks” reinforces expectations of the benchmark ratecut and market participants even priced in an
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