The eurozone financial crisis is not over, according to a majority of clients surveyed by ratings agency Fitch.

Fitch asked European fund managers (with €8.6trn of assets between them) whether the current buoyant financial markets reflected the reality of the situation.

It found that 41% reckoned the worst of the crisis is over due to strong support from the ECB and policy makers.

The remainder were split between:

• 29% who feel that this is a short-lived period of market calm;

• 30% who said markets are irrationally exuberant, ignoring the weak economic outlook for Europe.

That suggests the recent market rally could unwind, as Fitch warned:

If the latter is not validated by economic stabilisation and progress towards banking union, the danger is that market volatility will return with a vengeance over the summer, as it did in 2012 and 2011.

Fitch also found that only 9% of respondents ranked inflation as a high risk, versus 29% who regarded deflation as a major concern risk. Fears that loose, unconventional monetary policy from the world’s central banks would send prices spiraling have eased…

Sri Lanka’s central bank cut their benchmark rate by 50 basis points today, so I guess that makes it 512.

Vietnam just cut is rate from 8% to 7%.

That makes it 513.

Central Banks Keep Easing After 511 Cuts Fail to Spur Economies

Britain’s central bank left rates on hold and did not extend its bond purchases today, opting to wait and see if recent initiatives to boost lending will lift the struggling economy.

Its decision to leave its key rate at 0.5 percent and the stock of bond purchases at 375 billion pounds ($584 billion) was widely expected by economists, who believe the central bank is shifting its focus away from bond purchases towards schemes to support the flow of credit.

The Bank of England announced a major expansion of its “Funding for Lending Scheme” last month to give bigger incentives for banks to lend to small businesses. >> Read More

Power Shift: First in a series on the rise of the central bankers and the global imposition of cheap credit

Quietly, without much public fuss or discussion, a new ruling class has risen in the richer nations.

These men and women are unelected and tend to shun the publicity hogged by the politicians with whom they co-exist.

They are the world’s central bankers. Every six weeks or so, they gather in Basel, Switzerland, for secret discussions and, to an extent at least, they act in concert.

The decisions that emerge from those meetings affect the entire world. And yet the broad public has a dim understanding, if any, of the job they do.

In fact, these individuals now wield at least as much influence over the lives of ordinary citizens as prime ministers and presidents.

Read more… @ CBC

Ben Bernanke will not be at the Kansas City Fed’s annual Jackson Hole shindig in late August this year . He has a scheduling conflict. Maybe he’s getting a haircut?

Bernanke, and former Fed chair Alan Greenspan, whom he succeeded in 2006, have periodically used the setting to preview important U.S. central bank actions

Reuters

Brazil’s central bank sought to reassure markets on Wednesday night that it was still the nation’s principal guardian of inflation by ending a period of easier monetary policy that lasted nearly two years.

The central bank’s monetary policy committee increased the benchmark Selic interest rate by 25 basis points to 7.50 per cent, in response to a surge in inflationthrough the top of the government’s official target range last month.

“The committee judged that the high level of inflation and the dispersion of price increases, among other factors, contributed to resilience in inflation and required a monetary policy response,” the central bank said in a note. >> Read More

The Bundesbank has launched an investigation into claims that Deutsche Bank hid billions of dollars of losses on credit derivatives during the financial crisis, according to people familiar with the situation.

Investigators from Germany’s central bank are scheduled to fly to New York next week as part of an inquiry into allegations that misvaluing credit derivatives allowed Deutsche to hide up to $12bn in losses, helping it avoid a government bailout.

They intend to interview people, including former employees, who have knowledge of Deutsche’s dealings in complex credit derivatives – known as leveraged super senior trades – between 2006 and 2009.

The Bundesbank inquiry opens a new front in the investigation. The Securities and Exchange Commission is among the regulators investigating the claims, reported in the Financial Times in December.

Deutsche has denied the allegations. On Wednesday the bank reiterated that the allegations were “more than two and a half years old” and had been the “subject of a careful and thorough” investigation by a law firm, which found them “wholly unfounded”. >> Read More

• In our opinion, recent changes to the functioning of certain oversight institutions may further undermine Hungary’s institutional effectiveness.
• We are revising our outlook on our ‘BB’ long-term sovereign credit rating on Hungary to negative from stable and affirming the ‘BB/B’ long- and short-term sovereign ratings on Hungary.
• The negative outlook indicates the potential for a downgrade if a deterioration of Hungary’s policy framework weakens confidence and medium-term economic growth prospects, or significantly raises financing costs and leaves Hungary exposed to diminished capital inflows.
• We are also revising to negative from stable our outlooks on the ‘BB’ long-term issuer credit ratings on the National Bank of Hungary. >> Read More