Interest Rate Roundup

Wednesday, June 06, 2007

Overseas central banks -- 1 hike, 1 pass, 2 on deck

Overnight and this morning, a couple of major central banks met to discuss interest rates. What'd they do?

* The Reserve Bank of Australia chose to leave its overnight cash rate at 6.25% for the sixth meeting in a row. That's still a six-month high for short-term Aussie rates.

* The European Central Bank, on the other hand, did raise short-term rates to 4% from 3.75%. That was the 8th increase since late 2005, and it leaves European rates at a six-year high.

Next up? The central banks in New Zealand and England. New Zealand may raise interest rates (currently at 7.75%) tomorrow, though that's a minority opinion, according to Bloomberg. The Bank of England also meets tomorrow, and is expected to stand pat at 5.5%.

The odd thing? The Australian dollar had a sharp RISE in the wake of the central bank's move to keep rates steady, while the euro lost a little ground after news of the ECB rate hike. Just goes to show you can't always "trade the news."


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