French Deficit Rises
The French Ministry of Economics and Finance has just published an update on the nations Current Account Balance, this deficit increased to -€64.2Bn in April from the figure of -€28Bn recorded in March.
Additionally, it has been reported that France is continuing to run a monthly trade deficit. The Trade Balance number for the month of April has been reported as -€3.9Bn, the trade gap has narrowed from the -€4.9Bn experienced in March, it had been expected to expand to -€5.0Bn on the month. The Export side of this balance is €36Bn, down slightly from the previous month’s €36.4Bn. Imports also fell from €41.3Bn in March to the current reading for April of €39.9Bn.
In an effort to stimulate underperforming Eurozone economies, such as France, the European Central Bank (ECB) yesterday took definitive interest rate action for the first time since November of last year. The Benchmark Refinance Rate was dropped from 0.25% to a new record low of 0.15%, more controversially however was the ECB’s decision to reduce the Overnight Deposit Rate from 0.0% to -0.1%. In terms of central banks in major developed economies this is being considered a ground breaking move by the European Central Bank’s Governing Council. The lack of price growth in the Eurozone for much of this year has been cited as being a symptom of tight liquidity in the market. The ECB, by effectively charging banks to hold deposits with them, hopes to encourage these banks to seek out other opportunities for their excess funds.
Commenting at the customary post decision press conference, ECB President Mario Draghi, noted that the central bank has gone as far as it is likely to go with interest rate cuts. He stressed however that the Bank is not yet finished with monetary easing, this would imply that quantitative easing is now firmly back on the agenda.
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