A clutch of top UK economic forecasters on Thursday swept under the rug predictions for another 50 billion pounds of gilt purchases they thought would take place starting just in a few weeks.
News that the UK economy bolted ahead at a 1.0 percent quarterly pace in the three months to September – nearly double the consensus prediction in the Reuters Poll and easily more than twice the last measured growth rate in the United States – was probably a good enough reason on the surface.
Deutsche Bank economists have tried to quantify what effect QE3 is likely to have on the U.S. economy. For an assumed $800 billion of purchases of both agency securities and Treasuries through the end of next year, the economy gets a little over half a percentage point lift over the course of two years and a net 500,000 jobs – or about two months’ worth of job creation in a typical strong recovery from recession.
In a model-driven assessment based on the past impact of QE1 and QE2, Deutsche Bank Securities chief economist Peter Hooper says this is what the Federal Reserve printing another $800 billion — slightly less than the gross domestic product of Australia — will do:
“Will he or won’t he?” That’s what investors, traders and policy-watchers in the financial markets are pondering, frozen at their terminals waiting to find out if Federal Reserve Chairman Ben Bernanke will persuade his colleagues to print more money this week.
Among economists who work for primary bond dealers, the firms who sell government bonds directly to the Fed, there’s a striking conviction rate that he will, 68 percent, according to the latest Reuters Poll of probabilities.
LONDON (Reuters) – The Bank of England looks set to launch a third round of bond purchases in July after unexpected news that such a decision was already the closest of calls this month, a Reuters poll showed on Wednesday.
A sharp fall in inflation reported for last month would give the Monetary Policy Committee, already narrowly split with four in favour and five against, some room to raise the programme to 375 billion pounds from the 325 billion spent thus far.
The trillion euro sugar rush that made Q1 the best start to the year for global stocks in more than a decade has already worn off, but what is most striking is not how quickly it ended. It’s how little the economic outlook has changed.
Cheap central bank money mainly seems to have boosted stocks and the optimism of stock market forecasters, who generally are the most bullish of the lot with or without wads of cheap money.
There was a time when 500 billion euros in cash was truly spectacular.
But investors and speculators hoping for an even more eye-popping cash injection at the European Central Bank’s second and most likely last three-year money operation on Wednesday are likely to be disappointed, based on past Reuters polls of expectations.
Ever since the ECB started offering cheap, long-term loans to keep cash flowing through banks during the financial crisis, a clear pattern has emerged in the forecasts of money market traders attempting to gauge their size.
WASHINGTON/LONDON (Reuters) – Manufacturing activity contracted in the euro zone and much of Asia in November, pointing to a global slowdown even as growth in the United States appears to be shifting into higher gear.
Thursday’s weak manufacturing surveys from the two regions underscored the ripple effects from Europe’s debt crisis, which has caused turmoil in financial markets.
LONDON/SINGAPORE (Reuters) – Manufacturing activity is contracting across Europe and most of Asia, data showed on Thursday, and a Chinese official declared that the world economy faces a worse situation than in 2008 when Lehman Brothers collapsed.
Factory activity shrank even further in the euro zone, reinforcing the view that the debt-strapped region is in recession, while British manufacturing contracted at the fastest pace in two years, raising the risk the UK economy may suffer the same fate.
LONDON/SINGAPORE, Dec 1 (Reuters) – Manufacturing
activity is contracting across Europe and most of Asia, data
showed on Thursday, and a Chinese official declared that the
world economy faces a worse situation than in 2008 when Lehman
Factory activity shrank even further in the euro zone,
reinforcing the view that the debt-strapped region is in
recession, while British manufacturing contracted at the fastest
pace in two years, raising the risk the UK economy may suffer
the same fate.
Who says central banking is boring? The European Central Bank, now grappling with safeguarding the survival of the euro zone, has made it to iTunes, with its monetary policy app “€conomia”. It challenges iPhone and iPad users with — you guessed it — keeping inflation at just under 2 percent. The new app is the on-the-go version of “The Monetary Policy Game” that has been available on its website for some time.
What is most striking is not the funky music soundtrack you would expect to hear playing quietly in the background while the Governing Council meets to set policy in Frankfurt. What really sticks out is the lack of monetary policy tools at the user’s disposal.