- Thilo Heidrich, an economist at Deutsche Postbank AG
The amount of money spent at retail outlets in the 17-nation economy slipped back in February, indicating weak domestic demand and adding to concerns that the currency bloc's recession extended into the first quarter. According to the Eurostat statistics agency, Eurozone's retail sales dropped 0.3% from January, when they increased 0.9%, meeting analysts' expectations. Compared with a year ago retail sales by volume were down 1.4%, reflecting the damage inflicted by the debt crisis as consumers cut spending. The Eurozone economy contracted for five quarters in a row, and latest data are highlighting the weakness of region's economy, adding to concerns that it may shrink in the first three months of 2013.
"On paper, you could say there's room for an interest-rate cut," said Thilo Heidrich, an economist at Deutsche Postbank AG (DPB) in Bonn. "On the other hand, you could say that would achieve nothing and would only use up some ammunition in case the debt crisis really worsens."
"The Eurozone economic confidence recovery has stalled, renewed financial-market tensions are, and will be, a drag," Schulz said. "The delayed recovery means that a rate hike is unlikely before the second quarter of 2014."
© Dukascopy Bank SA