MADRID | By Luis Arroyo | Which came first, the chicken or the egg? Does the credit decrease because the demand is weak or because banks don’t offer any? Requirements imposed by banks to lend money (excluding to the public administrations) are aggressive both in real and collateral interest rates. Meanwhile, the possibility that the ECB increased rates would further collapse bank credit.
LONDON | By Michael Gapen at Barclays | Persistent improvement in US labor markets has caused the Fed to continue tapering and to alter its quantitative policy rate guidance in favor of qualitative language indicating that the committee is prepared to maintain the current target rate for the federal funds rate for “a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee’s 2 percent longer-run goal.”
SAO PAULO | By Marcus Nunes via Historinhas | The Fed’s (and central banks in general) preferred tactic is “wait-and-see”, usually expressed in the form of “we will monitor closely”! Instead of becoming a focal point for the coordination of expectations, inflation has become a barrier to getting the economy’s recovery back on track.
LONDON | By François Cabau at Barclays Capital| The ECB stayed on hold this month. Keeping its easing bias, the Governing Council had a “very rich” and “ample” discussion on possible further easing measures. In our view, if expectations of a rebound in April HICP are not met, affecting the medium-term price outlook, the ECB may need to ease further.
SAO PAULO | By Marcus Nunes | For the last four years many have touted increasing the inflation target to 4% as the best way to “cure” our ills. If I well recall, it started with the IMF, at least by its Chief-Economist Olivier Blanchard, who in an IMF publication wrote “Rethinking Macroeconomic Policy.”
MADRID | By Juan Ballesta.
MADRID | By Jaime Santisteban | Market makers woke up with a torrent of data explaining how first quarter played out: Spanish public deficit, Eurozone’s activity indicators, and many more.
SAO PAULO | By Marcus Nunes | There is a significant difference between the discourse formulated by Ms. Yellen and the one formulated by Feldstein. While the first talks about a “suffering economy,” the second insists on being preoccupied about the future of inflation.
MADRID | By J.P. Marín Arrese | Pressure is mounting on the European Central Bank. Observers blame it for an overcautious approach to rate cutting. They openly express contempt at its reluctance in setting up aggressive asset-buying schemes. Even the IMF advocates an across-the-board cheap money stance. As the ECB fails to act when inflation rates sink far below the 2% target and credit is faltering, most believe Draghi remains hostage to hardliners in Germany.
SAO PAULO | By Marcus Nunes | That’s plainly absurd. But maybe it’s what you should expect if the Fed narrows down its focus of analysis to a “corner of the room (inflation) which has already been ‘cleaned-out’”.