German investor confidence weakens in July, the second month in a row

Analysis

Investor confidence in the German economy declined for a second straight month in July, in a sign that its hot pace of growth may be cooling. But at least one more rise in interest rates is needed, one member of the European Central Bank's Governing Council said yesterday. 

Greek Governor Nicholas Garganas said he “would not be surprised” if 2007 eurozone growth was revised upward from the 2.6% midpoint estimate range released by the European Central Bank in June. “I would expect that a further withdrawal of monetary accommodation is warranted,” Garganas told the news agency Bloomberg. The Council would have to wait for more data to determine “whether to take action in September or October,” he was quoted as saying. “The euro-zone economy is growing at a rate clearly above its non-inflationary pace. We will continue to monitor developments closely, or very closely if you prefer,” he told Bloomberg.

A growing minority of analysts think another rise to 4.25% will be the last in the series of ECB hikes, amid signs that the euro economy has peaked. The latest survey of analysts and institutional investors by the German ZEW economic think tank showed its economic sentiment fell to 10.4 this month from 20.3 in June. “The financial market experts expect an economic downturn within the next six months particularly in the consumption and construction sectors, which could be attributed to the upward trend of the oil price and higher interest rates,” ZEW said. (independent.ie)

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