monetary policy

BCE grande

Eurozone M3 monetary aggregate grows by 1.9% in April, lowest reading since July 2014

According to data from the European Central Bank (ECB), the monetary aggregate M3 in the Eurozone grew by 1.9% year-on-year in April (+2.5% in March) to €16.03 trillion. The reading, which was the lowest since July 2014, was slightly below the 2.0% growth rate expected by FactSet consensus analysts. The ECB also published that bank lending to eurozone households rose by 2.5% year-on-year in April to €6.87 trillion, marking the…

ECB's president Christine Lagarde

ECB hikes policy rates by 50bp

Annalisa Piazza (MFS Investment Management) | The ECB hiked policy rates by 50bp and pre-committed to hike by another 50bp in March. The depo rate now stands at 2.50%. Looking ahead, the ECB is widely committed to keep rates in restrictive territory to reach the inflation target in the medium term. The overall communication by the ECB remains relatively hawkish as the policy stance remains restrictive. That said, the market…


Lagarde insists “staying the course” is her monetary policy mantra

Link Securities | European Central Bank (ECB) President Christine Lagarde said on Friday that “staying the course” is her mantra on monetary policy and urged central banks around the world to do the same to achieve output recovery. Lagarde described 2022 as “a strange, strange year” as the low growth figures seen in the world’s largest economies were “not usual”. However, she expressed hope that “cooperatives, consumers, and state policymakers…

Japanese general

Japan: The beginning of the end of the BoJ’s Yield Curve Control

Alicia García Herrero (Natixis) | Financial markets were caught off guard when the Bank of Japan (BoJ) adjusted its monetary policy on December 20th, 2022. The Bank decided to lift the ceiling on the 10-year JGB yield to 0.5% from 0.25% under the yield control (YCC). One interesting point to make is that the BoJ did not take the decision against the wall. In fact, the upward pressure on the…

Federal Reserve

Uncertainty over monetary tightening hurts the economy

Juan Pedro Marín-Arrese | The Fed is running out of munition after raising its rates substantially. The narrowing margin forces it to slow down monetary tightening. Keeping unabated its previous speed would wreak havoc on the economy. Yet, Jay Powell countered any hope of further softening by delivering a relentless hawkish message at the latest press meeting that plunged stocks into utter disarray. Powell made it crystal clear at Jackon…

ECB night

The ECB is committed to continue to increase rates significantly

Annalisa Piazza (MFS Investment Management) | The ECB is committed to continue to increase rates significantly, at a steady pace and to keep rates in restrictive territory until the medium inflation target returns to target. The central bank announced that it will start quantitative tightening (QT) related to the APP at the beginning of March 2023, with a “measured and predictable pace”, allowing the Eurosystem balance sheet to decline by…

Jerome Powell baffled both the experts and the markets

Is Powell Ready To Do Whatever It Takes?

J.P. Marín-Arrese | While markets mildly reacted to the widely discounted rate hike and the prospect of protracted high-interest levels, the stern message delivered by Jerome Powell unsettled them. Stocks tumbled as he emphasised the Fed’s commitment to tighten its policy as long as inflation remains unabated, flying high above its 2% medium-term target. In short, he sounded ready to do ‘whatever it takes’ to curb the current price spiral….

ECB night

Can The European Central Bank Subdue Inflation?

J.P. Marín-Arrese | Pressed by a skyrocketing headline and core inflation, the ECB took the boldest step in its history when it raised rates by 75 basis points. Further hikes will follow in a desperate attempt to curb the current price spiral. Will they achieve this goal? For all the bombastic claims made by Christine Lagarde, there is good reason to doubt the ECB might solve such an entrenched problem….

ECB's president Christine Lagarde

ECB: “Better Late than Never”

ifo President Clemens Fuest has welcomed the European Central Bank’s decision to raise interest rates.  “Better late than never,” he said in Berlin on Thursday. “The 0.75 percent increase is a step in the right direction. Nevertheless, monetary policy remains very expansionary. Over the coming months, further interest rate increases will have to follow. Interest rates are still very low, and private households’ inflation expectations are constantly climbing higher. The…

ECB's president Christine Lagarde

The ECB’s Resolve To Tame Inflation

J.P. Marín-Arrese |Christine Lagarde announced the first rate hike in a decade as an upfront offensive against inflationary pressures. While no one doubts this tightening aims at cutting short the current price race, the claim that it is an early reaction fails to match the records. For more than a year, all advanced economies have witnessed soaring prices. Yet, the ECB dismissed this trend as a temporary mismatch betwen demand…