European Central Bank President Mario Draghi is in Washington for talks at the International Monetary Fund and will deliver a speech there. Presumably Greece will be item 1, 2, 3 and 4 on the agenda.
Prime Minister Alexis Tsipras told Reuters on Thursday he was “firmly optimistic” of reaching an agreement with Greece’s creditors. But he acknowledged that the two sides disagreed on four major issues: labour rules, pension reform, a hike in value-added taxes and privatisations.
Russia’s central bank meets having unexpectedly cut its key policy rate in January by 200 basis points to 15 percent, raising a question mark over its independence from political pressure, given inflation rose to a 13-year high of 16.7 percent in February.
The International Monetary Fund surprised on the upside with its programme for Ukraine last night, agreeing $17.5 billion in loans as expected but agreeing to pump $10 billion of that into the near bankrupt country over the next year and handing over $5 billion imminently.
Spain remains the focus for the markets but here comes Greece racing up on the outside lane. Officials told us exclusively yesterday that Athens is way, way off the targets set by its bailout programme and a further restructuring will be needed. If so, it’s almost inevitable this time that euro zone governments and the ECB will have to take a hit. Are they prepared to? There’s little sign of it so far although a key ally of German Chancellor Angela Merkel said last night that a second haircut was an option.
This week’s evaporation of confidence in the euro zone’s biggest government debt market — Italy’s 1.6 trillion euros of bonds and bills and the world’s third biggest — has opened a Pandora’s Box that may now force investors to consider the possibility of a mega sovereign debt default or writedown and, or maybe as a result of, a euro zone collapse.