In Europe

Eurozone

Who Has To Do What In Europe

Together with growth forecasts for the EU, ranging from 1.9% to 2% in 2016 and rising to 2.1% in 2017, the European Comission recently mentioned in its annual growth survey the possibility of making the Stability Pact more flexible. They also highlighted the main macro imbalances of each member state.

 

 

 



spain italy

Good NGDP News From Spain And Even Italy

James Alexander via Historinhas | While we firmly believe NGDP expectations are the best guide to monetary policy we are still some way from having a proper market measure of those expectations. However, two of the peripheral countries, Spain and Italy have now produced their first estimate of NGDP for 3Q.


inflacion precios1

Common Inflation, The Only Reasonable Way Out For The Eurozone

Countries in the North don’t even want to talk about creating more inflation to help those in the South. Why should we, they say, if they are the debtors? Could they be persuaded that it is in their interests, given that the alternative could be default and the collapse of the eurzone economy and the euro? For the time being, they have allowed the ECB to work on moving away from zero inflation, but not beyond the 2% limit. And even this limit is not expected to be reached until 2017.


ECB1

ECB’s Caution Will Support Europe’s Recovery, But Needs Fed’s Decision

Most investors had priced in a bold increase in monthly purchases by the ECB under its QE programme. No wonder they showed utter dismay when confronted with a mere extension of the scheme until March 2017 plus pledges to buy sound local authorities’ issues. The slight reduction in the current negative rate imposed on overnight money placed by credit institutions in the central bank did little to raise market sentiment.


draghi2

Draghi Disappoints Markets With His “Mini” QE2

Expectations for Draghi’s second QE programme were running so high that, in the end, he disappointed the markets. Investors had bet on more aggressive stimuli, so the European stock exchanges tumbled over 3% at the close (having been in positive territory mid-morning). The euro jumped to over 1,09 dollars (its biggest rise since March) and European debt registered its largest increase so far this year.


syrian refugees

EU-Turkey Refugee Agreement: A Life Saver Or A Dud?

Nick Malkoutzis via Macropolis | An average of around 2,200 refugees and migrants have arrived on the shores of Greece’s eastern Aegean islands every day this year. Before being piled into rubber dinghies and other unsuitable vessels for the crossing, they purchase life vests from shops in Turkey.


The paradox of the ECB long-term refinancing operations

The Collateral Damage From The ECB’s New Measures

The market has already priced in that the ECB will adopt new monetary stimulus measures at tomorrow’s meeting, which in theory should boost growth and inflation in the eurozone. Analysts agree that more aggressive measures are necessary, but due care must be taken not to damage financial stability.