The European Central Bank may keep borrowing costs on hold, as inflation in the EU was surprisingly lower in May. It dropped to 2.7% from April’s 2.8%. Exchange traded funds (ETFs) give investors the opportunity to participate in economic growth as they give broad-based exposure during a shaky “recovery”.
“Looking ahead, euro-zone headline inflation is set to stay well above 2% in the remainder of this year as energy and food prices continue to have an upward impact on consumer prices,” Martin van Vliet, an economist at ING Groep NV in Amsterdam, said. “The decline was largely due to lower energy prices and the unwinding of the ‘late Easter effect,’ which led to a surge in inflation in the leisure and entertainment sector last month.”
Simone Meier for Bloomberg reports economists anticipated no change in the rate. The recovery may be unwinding, but the fact that there is not a need for an uptick in rates is a good sign in the right direction.
Countries under scrutiny:
- If Greece gets a bailout, will Spain be next? iShares MSCI Spain (NYSEArca: EWP) is up 6.8% over the past week. The banking industry in Spain is looking battered, and the ETF invests almost half to the financial sector. [Spain ETF Affected by Moody’s Downgrade.]
- Poland is set to prosper from Germany’s latest announcement to wean off of nuclear energy. Meanwhile, growth in the country was at its highest rate since 2008 in this first quarter, reports Monika Rozlai for Bloomberg. iShares MSCI Poland Investable Mkt Index (NYSEArca: EPOL) is up 7.2% for the past week. [Poland ETFs Benefit from Debt Crisis.]
- Germany is shining in solar energy’s ring, and the ETF iShares MSCI Germany (NYSEArca: EWG) is up 5.6% the past week.
Tisha Guerrero contributed to this article.