Impatient euro zone tells Greece to get on with it

March 10, 2015

Greek Finance Minister Varoufakis walks past  Eurogroup Chairman Dijsselbloem at a euro zone Finance Ministers meeting in Brussels

The head of euro zone finance ministers urged Greece on Monday to “stop wasting time” and buckle down to serious talks on implementing a reform programme to secure urgently needed funds from its international creditors.

Ministers spent barely 30 minutes discussing Greece at their monthly meeting, stressing it was time for Athens to engage in detailed discussions with experts from the European Commission, the European Central Bank and the International Monetary Fund.

“Little has been done since the last Eurogroup (meeting two weeks ago),” Eurogroup chairman Jeroen Dijsselbloem said.
That lack of movement so far is set to weigh on European shares this morning.

Technical talks with the three institutions will begin on Wednesday while the European Central Bank’s Governing Council is set to hold a teleconference on Thursday to discuss extending emergency liquidity assistance for Greek banks.

All 28 EU finance ministers hold an Ecofin meeting in Brussels today.

On the agenda are the decision to give France a further two years to meet EU budget deficit limits which has caused some disquiet about the bloc’s big beasts getting different treatment from their smaller peers, and European Commission President Jean-Claude Juncker’s 300 billion euro investment plan.

Euro zone bond yields fell on Monday as the ECB and the bloc’s national central banks began buying bonds under a one trillion euro money-printing programme. Traders said German, Belgian, Finnish, Austrian, Dutch and French central banks were among those to which they had already sold bonds though they said sizes were relatively modest.

Despite doubts about finding enough bonds to buy, the ECB may have got lucky, launching into QE just as the euro zone economy shows signs of life and banks start increasing lending to businesses and households – increasing the chances that it will succeed in helping to boost growth and inflation.

Ukrainian President Petro Poroshenko said last night that pro-Russian rebels had withdrawn a significant amount of weaponry from the front lines in eastern Ukraine. Attacks have fallen significantly but accusations of continued violence on both sides show the fragility of the peace accord agreed in Minsk last month.

Bank of England Governor Mark Carney will testify to a committee of peers in parliament’s House of Lords.

He faces a dizzying agenda including whether new capital rules will affect the amount banks are willing to lend, what the difference is between good deflation and bad deflation, how effective quantitative easing has been in boosting the UK economy, the possible impact on Britain of new euro zone turmoil, whether banks are too big to manage, why productivity in the UK has been weak since the financial crisis and when powers to place limits on residential mortgage lending might be used.

The UK economy is rattling along at a fair lick but a near absence of inflation means there is no pressure on the Bank to tighten policy. Financial markets currently price in a first rate hike around the turn of 2016.

UK rate setter Ian McCafferty, who voted with along with one colleague to raise rates over the second half of last year before thinking again, has said he will keep a close eye on wage data over the next few months before deciding whether to resume voting for higher rates. He makes a speech this evening.

The British Retail Consortium reported overnight that consumers kept shops busy in what is normally a quiet month in February, suggesting a plunge in inflation has given spending a boost. Retail spending was up 1.7 percent year-on-year.

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