S&P 500   4,662.85
DOW   35,911.81
QQQ   380.01
S&P 500   4,662.85
DOW   35,911.81
QQQ   380.01
S&P 500   4,662.85
DOW   35,911.81
QQQ   380.01
S&P 500   4,662.85
DOW   35,911.81
QQQ   380.01

Senior ECB official: rate rise too soon could choke recovery

Saturday, January 15, 2022 | The Associated Press


File---File picture taken Oct.6, 2021 shows the European Central Bank at the river Main in Frankfurt, Germany. A senior European Central Bank official says that raising interest rates prematurely could “choke off the recovery,” comments that come as inflation in the 19-nation euro area has hit a record rate. (AP Photo/Michael Probst,file)

BERLIN (AP) — A senior European Central Bank official says that raising interest rates prematurely could “choke off the recovery,” comments that come as inflation in the 19-nation euro area has hit a record rate.

The European Union's statistical office said Jan. 7 that the annual inflation rate rose to 5% in December — the highest level in the eurozone since recordkeeping began in 1997, breaking the previous record of 4.9% from November.

That compounded pressure for the ECB to act on inflation since it has kept interest rates ultra-low to stimulate an economy recovering from the depths of the pandemic. At present, analysts don’t expect the bank to raise rates until 2023.

In an interview with Saturday's edition of German daily Sueddeutsche Zeitung, ECB executive board member Isabel Schnabel stressed the bank's expectation “that inflation will fall significantly over the medium term.”

“That is why we are not raising interest rates now, as some are calling for,” she said.

The ECB's projections foresee medium-term inflation even falling below the bank's target of 2%, though there is currently “great uncertainty” over the outlook, she added.

“That is why we should not raise interest rates prematurely, as that could potentially choke off the recovery,” Schnabel said. “But we will act quickly and decisively if we conclude that inflation may settle above 2%.”

She acknowledged, however, that the bank views the current year-on-year figures “with some concern, as they are higher than we initially expected.” But she noted that, calculated over a longer period, inflation has not increased as much as they suggest.

Inflation is traditionally a particularly acute concern in Schnabel's native Germany, which has Europe's biggest economy.


7 Retail Stocks to Buy After Strong Quarterly Earnings

Earnings season follows a predictable pattern. Bank stocks report first; then big tech stocks weigh in. And now, late in earnings season, we hear from the retail sector. Investors were expecting strong numbers and, for the most part, retailers delivered.

However, for some retailers, this may become a “sell the news” event.

That’s because on August 16, before the big-name retailers reported, the U.S. Retail Sales Report showed a 1.1% decline in retail sales in July from June. So while retail sales for the last two quarters will be strong, investors are wondering if the sector is entering a period of slowing growth. Concern about the Delta variant perhaps bringing more restrictions to the retail sector adds to the concern.

However, sectors don’t move in lockstep. In every market, there are strong performers even in tough economic conditions. This was true during the pandemic. And it’s true in the recovery. Summer is traditionally a slower season overall for retail. The July numbers probably do not reflect all of the back-to-school purchases. And, of course, stores are already beginning to prepare for the holiday season.

View the "7 Retail Stocks to Buy After Strong Quarterly Earnings".


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