RATES SEEN ON HOLD AT LEAST THROUGH TO TAIL END OF 2010 WHILE ECB GAUGES EFFECTS OF PHASING OUT ITS SPECIAL CREDIT SUPPORT MEASURES
· Anaemic real GDP growth barely positive in 2009 Q4 entirely reliant on net exports as a further fall in fixed investment results in negative domestic demand.
· Economic activity remains weak and patchy at the start of 2010 and inflation remains fairly subdued but business confidence continues to improve.
· Annual M3 growth rate turns negative again and bank lending to the private sector continues to fall as short-term loans to non-bank corporations are cut back further, although lending to households continues to expand.
· EZA still expects ECB to keep rates on hold at least until the tail end of 2010, preferring to gauge first the market impact of the phased withdrawal of its non-standard credit support measures.
· Modalities of the joint EuroZone/IMF stand-by facility for Greece [see EZA938/29Mar10] likely to be discussed but no public announcement expected
© Eurozone Advisors Ltd
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