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Dennis Gartman: Central Banks Too Aggressive

Wednesday, 6 Apr 2011 | 1:58 PM ET

With the European Central Bank expected to announce a 25 basis point rate hike on Thursday, trader Dennis Gartman said such actions are too soon.

Central banks around the world are being "a little too aggressive," Gartman argued. By raising rates, central banks think the world's economies are stronger than they actually are. Gartman thinks the ECB's rate hike is bound to happen, though. He does not think the rest of the world, however, will continue raising rates.

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The euro is continuing to rise against the dollar today on expectations of a 25 basis point rate hike out of the ECB tomorrow, with the Fast Money team.

Looking forward, Gartman thinks this is an one-time event, where the ECB will act alone. In the future, he thinks central banks will work together to stimulate the world's economies. The ECB will work with the U.S. Federal Reserve, in particular, on monetary policy.

Gartman, who has called for a breakup of the euro in the past, believes the rate hike may ultimately push peripheral European countries to leave the shared currency. He said Portugal, Ireland and Spain, for example, need a weak currency to help aid their debt-laden economies. A stronger euro benefits Germany and France, who are concerned about runaway inflation, not the weaker European nations, he noted.

“If I were the Portuguese, I would be voting to drop out," Gartman said. "I need a weak currency."

Gartman, who manages funds that are short the euro, cautioned that it is unlikely any European country will drop out of the currency in the next several months. He stressed, however, that the rate hike undermined the value of a shared currency for peripheral nations.

With more than 30 years of experience in currency and commodities trading, Gartman is a "Fast Money" contributor and publisher of the widely read "The Gartman Letter."

—With CNBC's Catherine Holahan

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Trader disclosure: On April 6, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Stephen Weiss owns (GDX), (FAS), (JPM), (QCOM), (BTU), (CNX), (COP), (DVN), (HK), (UUP), (TBT), (DRR), (MSFT) and (NIHD). Stephen Weiss is short (X). Steve Cortes owns (SDY), (EXC) and (SO). Steve Cortes is long treasuries. Steve Cortes is short (F), (BAC), (TOL) and (QQQ). Pete Najarian owns (PFE), (TCK), (AAPL), (AKAM), (C), (HK), (HPQ), (TEVA), (MS) and (RSX). Pete Najarian is long (F) bonds. Pete Najarian is long (RIMM) calls. Pete Najarian is long (AVL) calls. Pete Najarian is long (CNX) calls. Pete Najarian is long (EWZ) calls. Pete Najarian is long (HUN) calls. Pete Najarian is long (ICO) calls. Pete Najarian is long (MYL) calls. Pete Najarian is long (NTAP) calls. Pete Najarian is long (XLF) calls. Pete Najarian is long (PMCS) calls. Pete Najarian is long (BIG) calls. Pete Najarian is long (CVS) calls. Pete Najarian is long (XL) calls. Pete Najarian is long (WFT) calls. Pete Najarian is long (JOYG) calls. Pete Najarian is long (MYL) calls. Pete Najarian is long (AXL) calls.

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Brian Kelly
Accounts Managed by Kanundrum Capital are long (SLV)
Accounts Managed by Kanundrum Capital are long (GLD)
Accounts Managed by Kanundrum Capital are long silver futures
Accounts Managed by Kanundrum Capital are long gold futures
Accounts Managed by Kanundrum Capital are long (EBAY)
Accounts Managed by Kanundrum Capital are long (MON)
Accounts Managed by Kanundrum Capital are long (VLO)
Accounts Managed by Kanundrum Capital are long (RDC)
Accounts Managed by Kanundrum Capital are long (ATW)
Accounts Managed by Kanundrum Capital are long euro
Accounts Managed by Kanundrum Capital are long (FXE)
Accounts Managed by Kanundrum Capital are long (FXY) puts
Accounts Managed by Kanundrum Capital are short (XLF)
Accounts Managed by Kanundrum Capital are short (SMH)
Accounts Managed by Kanundrum Capital are short copper futures

Mark Gulley
**No Disclosures

Dennis Gartman
Funds managed by Dennis Gartman are long Canadian Dollars, Australian Dollars
Funds Managed by Dennis Gartman are short Euros, 10-yr U.S. Treasury, Sterling

CNBC.com with wires.

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