The euro was lower yesterday and kept its losses today against the US dollar and the Japanese yen after the International Monetary Fund cuts it growth forecast for the eurozone and predicted that inflation will slow, leading, perhaps, to lower interest rates.
The IMF predicted that the economy of the euro area will rise 0.2 percent in 2013, while the previous estimate was 0.7 percent. The economy is expected to decline by 0.4 percent this year. As of the global growth, the world economy is expected to expand by 3.3 percent in 2012 and by 3.6 percent in the next year. The previous projections were at 3.5 percent and 3.9 percent respectively.
Additionally, the IMF predicted that inflation will slow to 1.6 percent next year and suggested that the European Central Bank should lower interest rates in such case. The fund said:
The probability of falling prices is unusually high, reaching almost 25 percent. This projection gives the ECB ample justification for keeping policy rates very low or cutting them further.
EUR/USD fell from 1.3023 to 1.2966 yesterday and traded at 1.2980 as of 00:13 GMT today. EUR/JPY traded near 101.68, following the drop from 102.43 to 101.56.
If you have any questions, comments or opinions regarding the Euro,
feel free to post them using the commentary form below.