The European Central Bank is starting to see a bit of what it wants, just as it’s dropped probably the heaviest hints ever for an increase in monetary easing.
The Federal Reserve’s planned smooth and gradual rate hike path may be bumpier than anticipated if U.S. economic growth over the next several months and punishingly cold winter weather follow a well-established recent pattern.
Not long ago, the big debate was over who would raise rates first, the U.S. Federal Reserve or the Bank of England. Now with the Fed giving clear signals it’s on the brink of hiking and the BoE appearing to be pushing that day further off into the future, one could naturally conclude that the inflation outlook in both economies is vastly different.
Ever since Bank of Canada Governor Stephen Poloz took office, he has preached the merits of a weaker currency for Canadian exports. But the roughly 30 percent fall in the dollar since then has failed to coax an export-based revival in Canada.
The higher you climb, the thinner the oxygen. As it prints more money to help the economy, the European Central Bank has climbed ever steeper. Yet prices, a barometer of economic health, are dangerously close to reversing. If that happens, and shoppers postpone big buys or companies keep a lid on wages, we could see Japan-like stagnation. To avoid that, the ECB is set to top up bond-buying.
The consensus on when the Bank of England finally pulls the trigger and hikes interest rates from a record low 0.5 percent firmly settled on the second quarter of next year in the latest Reuters poll.
The British labour market has been a mixed bag of late.
On the plus side, there’s been plenty of good news about people getting jobs. But wage growth has slowed, against the expectation of some economists who thought tightness in the labour market would be pushing up wages more strongly by now.
Millions of Latin Americans risk losing their jobs as a consequence of the region’s economic downturn. Job losses are already piling up in Brazil, mired in its worst recession in generations, and look increasingly likely in other countries, according to a research report by UBS.