MADRID | By The Corner | “I would like to stress that the risk of a self-reinforcing deflationary downward spiral consisting of falling wages and prices, as evoked by some, is also low, despite the present, very low inflation rates in the euro area. These are mainly a result of falling energy prices and the adjustment process in crisis countries,” European Central Bank Governing Council member Jens Weidmann said on Tuesday, playing down deflation risk. Anyway, what happened with the ECB’s 2pc inflation target?
MADRID | By Francisco López | Investors keep betting on European actives, even though the eurozone economies are facing some serious problems: deflation risk, unemployment records and even a possible war in Ukraine. Why does the European stock exchanges dominate analysts’ recommendations?
MADRID | By Jaime Santisteban | BBVA takes a look on the bright side of the Spanish economy in 1Q14: growth, exports, domestic demand, labor market, public spending reduction. Santander urges the EU to hasten arrangements on SRM to meet Banking Union agenda. Otherwise, stress tests won’t have credibility.
MADRID | By The Corner Team | Greek billionaire, investor, philanthropist and speculator Geoge Soros is well known for his pessimissm towards the euro and his enthusiasm for getting headlines. During a visit to London for his book tour, he made a case against the excess of austerity in the eurozone and critizised the recipes imposed by the German Parliament on its neighbours like Spain.
NEW YORK | A guest post by Benjamin Cole via Historinhas |The U.S. Bureau of Labor Statistics tracks “unit labor costs,” and back on February 6, they came out with their latest report. Usually I look for this report, but this time I missed it. The news? We are in deflation, when it comes to labor costs.
By David Denton via The Richter Scale | For anyone who was growing up in the 1970s there is a short list of things that one has to be concerned about: The music of The Bay City Rollers, the instant pudding – “angel delight”, playing rugby against the Welsh and inflation. Although the oil price shocks affected all industrialised economies inflation had a particularly severe impact on the UK, we quickly became known as the sick man of Europe.
LONDON | By Michael Gavin at Barclays | The recent decline of headline and core inflation in the US and Europe has intensified interest in the economics of deflation, particularly the perceived danger that Europe may be headed for a deflationary episode. Deflation is particularly unsettling for many policymakers and market participants because of the theoretical risk that it may render monetary policy ineffective, creating a ‘liquidity trap’ from which it may be very difficult to escape.
MADRID | By JP Marin Arrese | Prices like the weather inescapably lead to widespread demurral. They always look either overly hot or unduly cold. Yet the current debate on potential deflation seems largely shrugged off in Spain, even confronted with a CPI dwelling in minus territory. A predictable reaction in a country that scores a solid record of relentless price hikes.
MADRID | By Fernando G. Urbaneja | In a surprising move, the European Central Bank cut interest rates on Thursday. This is just a sign of the multiple fears shared by the institution and Mr Draghi: the ghost of deflation, the need for credit or the European prices and asset inflation. But both Mr Draghi and the ECB’s credibility have been boosted lately. What are they scared of then?
[Video by FT: “Is Europe getting deflated?”]