05 December 2013 - 23:10 pm
- Positive US data points to Fed stimulus cut
- BoE and ECB keep policy on hold
- Osborne unveils reforms in Autumn Statement
FTSE 100: -0.18%
CAC 40: -1.17%
FTSE MIB: -1.75%
IBEX 35: -1.45%
Stoxx 600: -0.89%
European equities slumped after the release of upbeat US data fuelled concerns that the Federal Reserve will begin reducing monetary stimulus at its next meeting.
US initial weekly jobless claims fell to 298,000 in the week ended November 30th, compared with a total of 321,000 the previous week and well below the consensus forecast for a reading 320,000. >> Read More
05 December 2013 - 16:20 pm
All eyes will be on European Central Bank president Mario Draghi as he unveils new economic growth and inflation forecasts for the region, after the bank’s first rate-setting meeting since last month’s surprise cut to its main refinancing rate.
The ECB is expected to keep the benchmark rate and its deposit rate unchanged this month at 0.25 per cent and 0 per cent, respectively, as it awaits further data on whether the euro-area’s still-nascent recovery is faltering.
But Mr Draghi is expected to face further questions about whether the bank needs to do more to prop up the region’s economy, as price pressure and growth remain weak.
A slight tick-up in inflation to 0.9 per cent in November, up off of October’s strikingly low 0.7 per cent, has eased some of the pressure on Mr Draghi.
Here’s what to watch for later today, as Mr Draghi addresses the media at 1:30 pm London time:
Inflation and growth
The bank will release new inflation and growth forecasts to 2015. Reminder that is current projections are for inflation to run at 1.5 per cent this year, and 1.3 per cent in 2014, versus the ECB’s target of just less than 2 per cent.
If its inflation forecasts remain well below target for 2015, it will fuel speculation that the central bank will ease policy again early in the new year. >> Read More
04 December 2013 - 20:35 pm
The European Central Bank surprised investors in November by cutting interest rates. Few expect the central bank to deliver two surprises in a row when it gives its decision on Thursday.
However, that doesn’t mean tomorrow’s gathering of the bank’s Governing Council (GC) will be short on interest.
For starters, it will deliver new inflation forecasts for 2015 that are likely to be key to shaping how much more stimulus policy makers decide to give the eurozone economy.
Economists at Barclays reckon that at this monthly meeting the ECB will introduce a plan to publish minutes of the meeting of the council.
The possibility has been under discussion at the central bank since last year, as it faces pressure to be more transparent about how monetary policy decisions are reached.
Other major central banks, including the Federal Reserve, the Bank of England and the Bank of Japan, all publish the minutes of the meetings of policy makers.
According to economists at Barclays: >> Read More
27 November 2013 - 20:00 pm
The European Central Bank has just reported the risks to the eurozone’s financial system from outside the currency bloc have grown on the back of the Federal Reserve’s talk of tapering its bond purchases, according to Claire Jones, our Economics reporter. This was despite a general improvement in market conditions.
In the latest edition of its twice-yearly financial stability report, the ECB said risks to the euro area had receded since its previous report was published in May. However, the threat from global financial market turbulence had increased since, as a result of the market turbulence resulting from Federal Reserve chair Ben Bernanke’s comments, first made in late May, that the US central bank could soon begin to slow its $85bn-worth of monthly bond buying.
The ECB said:
Starting in May, there was a significant repricing in global bond markets, which took place largely because of changing monetary policy expectations in the United States – with increased foreign exchange market volatility and stress borne largely by emerging market economies. >> Read More
27 November 2013 - 13:23 pm
The European Central Bank is considering a new long-term liquidity operation (LTRO) available only to banks that agree to use the funding to lend to businesses, a German newspaper reported today, citing sources.
ECB president Mario Draghi and other governing council members have repeatedly mentioned the option of conducting more liquidity operations, or LTROs, to help the fragile euro zone economy and ensure the flow of credit to the private sector.
The ECB extended more than €1 trillion of cheap three-year loans to banks through two long-term refinancing operations in late 2011 and early 2012.
But this time, an option under consideration is that the banks would have access to funding via the LTRO only if they agree to pass on the money in loans to industrial, retail and services businesses, Sueddeutsche Zeitung reported on Wednesday. >> Read More
27 November 2013 - 5:47 am
The short story is far simpler.
In order to offset the lack of loan creation by commercial banks, the “Big 4″ central banks – Fed, ECB, BOJ and BOE – have had no choice but the open the liquidity spigots to the max. This has resulted in a total developed world “Big 4″ central bank balance of just under $10 trillion, of which the bulk of asset additions has taken place since the Lehman collapse.
How does this compare to what China has done? As can be seen on the chart below, in just the past 5 years alone, Chinese bank assets (and by implication liabilities) have grown by an astounding $15 trillion, bringing the total to over $24 trillion
21 November 2013 - 8:52 am
- retains plan for 60 – 70 tln yen annual rise in monetary base
- BOJ will ease until 2% inflation is stable
- Keeps economic assessment unchanged
- Says economy is recovering moderately as a whole, but there are weaknesses
- BOJ board member Kuichi proposed making 2% inflation target a medium to long-term goal … his proposal was defeated on an 8-1 vote
- BOJ says CPI is likely to rise gradually
Link to full Statement on Monetary Policy (PDF)