Euro zone bank lending sluggish despite tsunami of QE and cheap cash

October 27, 2015

A picture illustration shows Euro banknotes in Zenica

For the European Central Bank, digging deeper into quantitative easing may be the only policy option left, now that growth in bank lending to businesses is stalling again.

The threat of fiscal dominance in Brazil

October 22, 2015

????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????Brazil’s inflation is approaching 10 percent and yet the central bank has opted not to raise interest rates in a meeting on Wednesday. Not only that, it pushed back its target to 2017.

More ECB QE? Perhaps best when the Fed raises

October 22, 2015

Those clamouring for the European Central Bank to ramp up its 60 billion euro per month stimulus programme will have to wait until December.

Keeping the QE door open

By Mark John
October 22, 2015

Swapping Frankfurt for the milder climes of the Med, ECB policy-makers meeting in the Maltese capital Valletta today are expected to keep the door open for more monetary stimulus but stop short of giving it, awaiting more evidence on the outlook for euro zone inflation. The Bank has got some outside help recently in the form of a slight rebound in oil prices, while the expected delay in the Fed’s rate hike also buys it some time. Yet the growth outlook is still poor – witness the German Finance Ministry’s overnight assessment of the impact of China’s slowdown on the euro zone’s top economy – and the euro is still a bit too strong for the ECB’s liking. December’s publication of the ECB’s staff forecasts may be the moment when the arguments for action become louder.

Goldman: chances of a Fed rate hike this year just 60 percent

October 19, 2015

Dudley shields his eyes as he looks into the audience at the Bretton Woods Committee International Council conference in WashingtonAfter months of speculation and delay, the chances the U.S. Federal Reserve raises interest rates this year are only 60 percent, according to Goldman Sachs chief U.S. economist Jan Hatzius.

Another quarter of remarkably precise China GDP growth data

October 19, 2015

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EU realpolitik

By Mark John
October 16, 2015

European Union leaders have offered Turkey a possible 3 billion euros in aid, the prospect of easier travel visas and “re-energised” talks on membership in return for its help stemming the flow of migrants to Europe. This is all a pretty good win for Turkey’s Tayyip Erdogan two weeks before the early elections he hopes will cement his authority. And what about the EU’s oft-stated concerns over human rights in Turkey? Doused by realpolitik. “In our neighbourhood, we are not asking any more for fundamental rights after the Arab Spring,” said one EU official. “We are asking for stability.”

Global economic slowdown in real danger of persisting: Reuters poll

October 15, 2015

China tunnelThe global economic slowdown shows a clear risk of extending into next year, along with an even more prolonged period of disinflation, according to the overwhelming majority of nearly 300 economists polled by Reuters around the world.

Courting Erdogan

By Mark John
October 15, 2015

Only a few weeks ago he was the butt of much EU criticism over his authoritarian behaviour. Now Turkey’s Tayyip Erdogan is being courted assiduously by the bloc’s leaders as an essential part of the solution to the migrant crisis. Tonight’s EU summit will review plans under which it is hoped Turkey will cooperate to stem the flow of refugees west from its territory; in return Ankara will want easier visa access to the EU, more aid and a new push on its EU membership bid. Significantly, Germany’s Angela Merkel will be heading to Turkey for talks this weekend.

Has UK wage inflation peaked yet?

October 14, 2015

?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????Wage inflation is supposed to pick up once unemployment gets down to a level at which scarcity of labour means companies are forced to pay more for top talent. This time, at least so far, the theory is either not working so well, or taking its time to kick in. Or perhaps the modest rise we’ve seen is the best we’re going to get.