A Surprise: Europe Cuts Rates
European central banks cut their key interest rates to 3 percent Thursday as they aligned their monetary policies for the conversion to a unified currency in January.
Germany, France, Italy, Belgium, the Netherlands, Portugal, Spain, Finland, Ireland, and Austria cut their rates in a coordinated move. Italy's rate was cut to 3.5 percent.
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Tietmeyer said inflation was not a concern in Europe.
Markets in Europe were trading higher before the announcement after the Bundesbank announced it would hold a press conference later, fueling speculation of a coordinated cut. The rally accelerated after the announcement at 8 a.m. EST.
The dollar was higher against European currencies, but lower against the yen. The U.S. Treasury market rallied moderately on the news, while the S&P futures contract turned positive.