Interest rate cuts in eurozone likely after poor German results
Irish Life Investment Managers Head of Asset Allocation Eugene Kiernan believes pressure for further interest rate cuts in Europe will increase after the publication of further disappointing figures on the German economy.
"While Wim Duisenberg has set himself against a further round of cuts in the short term, he's going to find it very difficult to continue to resist such action as the major economy of Europe continues to struggle," he said.
But Mr Kiernan said it was unlikely the European Central Bank (ECB) would cut rates at its meeting tomorrow but "they are likely to come soon".
Looking at the latest figures published yesterday on the German economy he said the news from industry for May continued to be downbeat. Unemployment also remains at high levels.
Compared with the rest of the eurozone the German figures stand at 9.4%, against 8.8% for the region as a whole.
"While some commentators were expecting a worse outcome, it is difficult to read too much into these figures as the jobs number may be boosted by more stringent rules on unemployment ," he said.
However, German unemployment fell for a second month in June.
The number of people out of work declined by a seasonally-adjusted 33,000 from May to 4.41 million, the biggest drop since May 2000, the Federal Labour Office said in Nuremberg.
The unemployment rate fell to 10.6% from 10.7%.
"We're sticking with our strategy to keep skilled workers even in difficult times and hiring on a case-by-case basis as opportunities arise,' said chief
financial officer of Muehlbauer Holding Hubert Forster a maker of machines for the electronics industry.
Germany's $2.3 trillion economy contracted in the first quarter and may have shrunk again in the second, Berlin's DIW research institute said.
