News / Economy

European Markets Boosted by US Rate Announcement

Traders at the Saxo Banque study their screens in their offices in Paris, August 10, 2011
Traders at the Saxo Banque study their screens in their offices in Paris, August 10, 2011

European stock markets appeared to welcome the news that the U.S. Federal Reserve plans to keep interest rates low for at least two years, but analysts say the situation remains highly volatile.

The U.S. central bank said Tuesday it would maintain “exceptionally low” interest rates at least until 2013. That appears to have rallied European markets.

Analysts across Europe said the pledge to keep interest rates low in the United States is good news.

Long-term concerns remain

But Robert Halver, a trader at Germany's Baader Bank, said the announcement was not enough to ease long-term concerns.

“We have a guarantee. Two more years of low interest environment in America. It’s a wonderful cushion, but it’s not sufficient to calm the markets, we need a political solution to the worldwide problems,” he said.

Halver said the markets are likely to remain unsteady until the political climate becomes more clear.

"I guess very important is that politics is able to find solutions for the debt crisis and for economic perspectives, right now in America, in the eurozone I find no clear solution for the problems we are facing each day," said Halver.

Slow global growth

The Paris-based Organization for Economic Cooperation and Development [OECD] said this week that most of the world's largest economies are heading for a period of slower growth. The Federal Reserve also said it is concerned about slow growth in the United States.

Last week the U.S. credit rating was downgraded, and some analysts worry the biggest economy in the world could be heading back into recession.

Olivier de La Ferriere, a fund manager in France, said slow economic growth means the markets will remain timid. The environment, he said, is uncertain.  

In Europe, an ongoing government debt crisis is a big part of the problem. Three countries, Greece, Portugal, and Ireland, have been bailed out by their euro neighbors to avoid defaults on their debts.

Watching Europe's debt crisis

Some fear Italy and Spain, two of Europe’s larger economies, could be heading in the same direction.

Eurozone countries, led by Germany and France, have stepped in to help their ailing neighbors. And on Monday the European Central Bank bought billions of dollars worth of Spanish and Italian bonds after they were shunned by private investors.

Investors say economic decisions that come after bitter political wrangling help create a climate of uncertainty.

Howard Wheeldon, a London-based investor, said what is needed is an overhaul of the way the eurozone and the single currency works.

“Quite simply, unless we have forward thinking ideas and acceptance that the euro in its present form, the single-currency experiment if you want to call it that, has actually failed, we need to rethink a way forward,” he said.

Until politicians make a clear commitment to do so, he said, markets will remain volatile.

You May Like

China Investigates Former Powerful Security Chief

Former security chief and member of Politburo Standing Committee, Zhou Yongkang, under investigation for suspected 'serious disciplinary violation' More

India, US Look to Reset Ties During Kerry Visit

This week's talks will be first high level interaction between two countries since Prime Minister Narendra Modi took charge More

Video Young African Leadership Program Renamed to Honor Mandela

YALI program, launched by President Obama in 2010, aims to build skills in business, entrepreneurship, public management and civic leadership More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Vietnamese Staging Chinese Product Boycott After Oil Rig Spati
X
Reasey Poch
July 28, 2014 7:18 PM
China recently pulled an oil rig from an area of the disputed South China Sea that Vietnam also claims. Despite the action, the incident has had a lingering effect on consumers in Vietnam. VOA's Reasey Poch reports from Hanoi on an effort to boycott Chinese products.
Video

Video Vietnamese Staging Chinese Product Boycott After Oil Rig Spat

China recently pulled an oil rig from an area of the disputed South China Sea that Vietnam also claims. Despite the action, the incident has had a lingering effect on consumers in Vietnam. VOA's Reasey Poch reports from Hanoi on an effort to boycott Chinese products.
Video

Video ESA Spacecraft to Land on a Comet

After a long flight through deep space, a European Space Agency probe is finally approaching its target -- a comet millions of kilometers away from earth. Scientists say the mission may lead to some startling discoveries about the origins of the water on earth. VOA’s George Putic has more.
Video

Video Young Africans Arrive in US for Leadership Program

President Barack Obama's Young African Leadership Initiative has brought hundreds of young Africans to the United States for a six-week program aimed at building their knowledge and skills in fields such as public administration and business. Out of the 50,000 young Africans who applied for the program, just one percent was accepted. VOA's Laurel Bowman caught up with some of those who made the cut and has this report.
Video

Video In Honduras, Amnesty Rumors Fuel US Migration Surges

False rumors in Central America are fueling the current surge of undocumented young people being apprehended at the U.S. border. The inaccurate claims suggest the U.S. will give amnesty to young migrants from the region. As VOA's Brian Padden reports from Honduras, these rumors trace back to President Obama's 2012 executive order to halt deportations for some young undocumented immigrants already living in the United States.
Video

Video Students in Business for Themselves

They're only high school students, but they are making accessories for shoes, fabricating backpacks and doing product photography - all through their own businesses. It's the result of a partnership between a non-profit organization that teaches entrepreneurship and their schools. VOA's Mike O'Sullivan and Deyane Moses met the budding entrepreneurs near Los Angeles.
Video

Video Astronauts Train in Underwater Lab

In the world’s only underwater laboratory, four U.S. astronauts train for a planned visit to an asteroid. The lab - called Aquarius- is located five kilometers off Key Largo, in southern Florida. Living in close quarters and making excursions only into the surrounding ocean, they try to simulate the daily routine of a crew that will someday travel to collect samples of a rock orbiting far away from earth. VOA’s George Putic has more.

AppleAndroid

World Currencies

EUR
USD
0.7305
JPY
USD
101.53
GBP
USD
0.5830
CAD
USD
1.0656
INR
USD
60.075

Rates may not be current.