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from Breakingviews:

French persist in dead-end strong-euro moaning

By Pierre Briançon

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Once again, a senior executive of Airbus  is complaining about the euro’s strength. Fabrice Brégier, the pan-European aircraft maker's current boss, told the Financial Times that the European Central Bank should do something about the “crazy” currency, the strength of which is hurting earnings. A few years ago it was Louis Gallois, then chief executive of Airbus’ parent EADS, who regularly vented his frustration with the central bank. Curiously, those complaints are never heard when Airbus or EADS is headed by a German executive.

Euro gripes are less an Airbus thing than a French one. Brégier’s comments come barely a week after Manuel Valls, the French prime minister, called on the ECB to bring the currency down. And former French President Nicolas Sarkozy was a regular at the weak-euro café.

The euro is up 13 percent against the dollar in the last year, and that creates headwinds for European exporters. But businessmen and government ministers in Germany, Europe’s largest export machine, never moan about the problem. In France, on the other hand, an influential school of thinking has long favoured competitive devaluations to boost the economy. The euro’s creation 15 years ago rendered this lobby group powerless, but it hasn't silenced it.

from MacroScope:

Deflating euro zone inflation expectations

EThe euro zone is not deflating, it's just at risk of a too-prolonged period of low inflation, says European Central Bank President Mario Draghi.

Judging by recent evidence, it might be very prolonged, which is bad news for an economy struggling to shift out of low gear.

from MacroScope:

Bank of England Minutes give rate debate another twist

 

carney.jpgSpeculation about when the Bank of England hikes interest rates took a new twist on Wednesday after minutes from the June policy meeting struck a less hawkish tone than the Governor did in a speech late last week.

Mark Carney caused a few shockwaves last week when he said rates could rise sooner than expected, sending sterling above $1.70 to a near five-year high

from Expert Zone:

Currencies and the collapse of globalisation

(Any opinions expressed here are those of the author and not of Thomson Reuters)

We live in stirring times. The president of the European Central Bank, Mario Draghi, crossed the monetary policy Rubicon and cut one of the euro area’s key interest rates into negative territory. This is dramatic stuff, as even the most economically oblivious are likely to recognise that negative interest rates are a radical policy.A picture illustration of Euro banknotes and coins taken in central Bosnian town of Zenica

At the same time, the United States Federal Reserve is gracefully gliding out of its quantitative policy position - and by October that money printing process is likely to be effectively at an end. The question from most investors is therefore “what next for U.S. monetary policy?”.

from MacroScope:

The Fed’s taper and the question of the “tag-along” $5 billion

By Ann Saphir

Federal Reserve policymakers are expected next week to trim their monthly purchases of bonds by another $10 billion, putting them on track to end the massive program by October or December. So – which will it be, October or December? Some Fed officials are pushing for an answer, and soon.

“I am bothered by the fact that I don’t really know what we are going to do on that,” Narayana Kocherlakota, the dovish chief of the Minneapolis Fed, told reporters last month. “It’s another signal that we are not being as clear about our policy choices as we should be.”

from Counterparties:

ECB goes negative

Europe has reached the zero lower bound. After its June meeting today, the European Central Bank announced a number of policy changes (a “swarm”, according to Joseph Cotterill). Bloomberg’s Maxime Sbaihi helpfully chartified the ECB’s actions:

BpX5eEVIIAIZ-KR.jpg

But will it work? ¯\_(ツ)_/¯

“The lesson today: Don’t underestimate Mario Draghi. Or the ECB, for that matter”, writes the WSJ’s Moneybeat team. The biggest move is probably the -0.1% deposit rate — meaning banks have to pay the ECB in order to park their money there overnight (here’s a more detailed explainer of negative rates). This is for two reasons, says Neil Irwin: first, if it’s expensive to keep money at the ECB, banks will hopefully do something else with it, like lend it out. Second, if it is expensive in general to keep money in Europe, the ECB hopes the price of the euro will fall in currency markets and inflation will rise — something Europe desperately needs.

from Breakingviews:

Central banks abet the complacency they fret about

By Swaha Pattanaik

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

It is commonplace for central bankers to protest against violent price swings, but these days they are concerned that markets are too placid. New York Fed President William Dudley, European Central Bank Governing Council member Ignazio Visco, and Bank of England Deputy Governor Charlie Bean have all recently expressed disquiet about very low volatility. They are right to worry, but in casting blame, policymakers need to look in the mirror.

from Breakingviews:

Fed fundamentalists deserve fresh listen

By Rob Cox

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

A portrait of Milton Friedman hangs at the entrance to the Stauffer Auditorium at Stanford University’s Hoover Institution. It carries no identification, and doesn’t need any. All who enter here can be counted on to recognize the patron saint of contemporary free-market economics. And so it was two days last week, when the leaders of what might be dubbed monetary fundamentalism gathered under Friedman’s watchful gaze.

from Breakingviews:

Bank of England can overlook Russia’s problems

By Ian Campbell, Edward Hadas

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

The British housing market is out of control. Many have called for the Bank of England to respond with a rate increase. It’s not that simple. London is not the UK, and the foreign funds which are supporting the capital’s bubble may fade away.

from Counterparties:

MORNING BID – The Fed, on the minutes

Investors will get a look at the Federal Reserve's thinking later on Wednesday in an otherwise quiet week when the Fed releases minutes from its April get-together. There may be a bit in the way of more up-to-date thinking in some of the scheduled Fed speeches, notably Bill Dudley of the New York Fed, along with Fed Chair Janet Yellen later in the week.

The minutes from February's meeting were instructive - they clung to the Fed's typical modus operandi in suggesting that economic difficulty early in the year was largely due to weather-related issues and pointed to improved outlooks in various areas, while still noting weakness in housing and consumer spending.

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