Europe January 2007

• The European Central Bank, which kept interest rates steady for two-and-a-half years from June 2003 through December 2005, raised rates 25 basis points in December for the fifth time in 2006. The benchmark bank rate now stands at 3.5 percent, its highest level since September 2001.
  
  
• UK’s jobless rate remained at 5.5 percent for the August-to- October period compared to the previous three-month period. The rate is a 0.6-percent increase from the same period in 2005.
  
  
• Germany’s third quarter unemployment rate fell 0.2 percent from the second quarter to 9.6 percent, a drop of 1.3 percent compared to the same quarter a year earlier.
  
  
• France’s third-quarter GDP remained the same as the previous quarter’s, but the government’s statistical agency expects things to improve. It expects a 0.9-percent growth in the fourth quarter of 2006 and an average growth of 0.5 percent per quarter in 2007. The government attributes this growth to a “less vibrant international environment” and a “fresh rise in earned income to produce solid gains in real household income.”
  
  
• France’s October unemployment rate remained at 8.8 percent, a 0.9-percent drop from the October 2005 rate. The government expects a drop to 8.2 percent by June 2007.
  
  
• The Swiss National Bank continued the global trend of raising interest rates by increasing its 3-month Swiss Libor rate 0.25 percent in December to 2 percent. The rate has slowly but steadily increased since standing at 0.25 percent in December 2003.
  
  
• Sweden’s Riksbank raised the benchmark repo rate 25 basis points in December to 3 percent. The Riksbank has now made six consecutive 0.25-percent increases since the rate fell to 1.5 percent in June 2005.
  
  
• The National Bank of Denmark increased its benchmark 2 week CD rate in December 0.25 percent to 3.75 percent.
  
  
• The Norges Bank raised Norway’s benchmark deposit rate 25 basis points to 3.5 points in December. The increase was the second 0.25-percent move in as many months and the seventh since the rate was 1.75 percent in May 2005.