The European Central Bank holds its last rates meeting of the year with some of the alarm about looming deflation pricked by a pick-up in euro zone inflation last week – though at 0.9 percent it remains way below the ECB’s target of close to two percent.
Now that the Federal Reserve is finally – we think for real this time – preparing to reduce its bond buying program, trading floors are abuzz with what it could do at the same time to offset such a move. Tapering its quantitative easing (QE) program would signal, after all, that the Fed thinks the U.S. economy is healing and that monetary policy needn’t be as accommodative as it has been. But since inflation is still too low and unemployment is still too high, the thinking goes, the central bank will want to do something that proves it is serious about keeping interest rates low for a while longer in order to make sure the economic recovery is durable.
Corporate profits and cash piles have never been higher. But it’s not just an economic imperative that firms get spending and investing, it’s their social and moral responsibility to do so.
Ukraine continues to top the European worry list.
Monday demonstrated how quickly the financial side of the equation can spiral out of control. The hryvnia currency slumped and the cost of insuring against Ukrainian default soared, forcing the central bank to intervene and urge its citizens not to spark a bank run.
Although UK house prices will head steadily higher in the next two years, analysts polled by Reuters are divided over whether the Bank of England can restrain the market if it overheats. Here’s what they said in the latest Reuters poll, taken this week:
When the U.S. Federal Reserve launched its third round of quantitative easing, or QE3, it was hailed as an “open-ended” policy that would last as long as needed. Most important for investors, the pace of the bond buying – which started at a somewhat arbitrary $85 billion per month – would be “data dependent.” Especially throughout the spring, officials stressed they were serious about adjusting the dial on QE3 depending on changes in the labor market and broader economy. But as the unemployment rate dropped to 7.3 percent last month from 8.1 percent when the program was launched in September, 2012, the bond-buying has effectively been on auto-pilot for 14 straight months.
Investors wanting London’s booming housing market for their portfolios and the city’s universities for their children are killing two birds with one stone.