J.L.M. Campuzano (Spanish Banking Association) | According to IMF data, the pace of growth of productive investment has slown in economies which are emerging and in the process of developing from levels of 10% in 2010 to 3.6% at the moment.
J.L.M. Campuzano (Spanish Banking Association) | From recent ECB statistics, there would seem to be a recovery in financing in line with the monetary authority’s implict goal when it implemented its extreme measures.
José Luis M. Campuzano (Spanish Banking Association) | Citi flags that the US/Euro Area monetary conditions have noticeably narrowed since the start of the year. Financial conditions have relaxed in the US and tightened in the Eurozone mainly due to the trend in the relative exchange rate.
There is a 100% possibility that the Federal Reserve will raise rates today. As a result, the interest rate outlook won’t be the subject of debate and the interest, more than ever, will be on how the Fed is going to manage its balance sheet. What’s clear is that the Fed’s balance sheet will remain bigger than it was in the past.
J.L.M. Campuzano | On Thursday, the ECB confirmed what many analysts were expecting: the limit on expansive monetary measures has now probably been reached, without this meaning there will be an immediate reversal. And the reason for this? Simply that the risks are more balanced now.
There are still divergences between the monetary policies of the Fed and the ECB. But if Draghi meets expectations for progressive withdrawal of the stimuli from September and rate hikes in the first few months of 2018, a new “currencies war” is not on the cards in the near future.
J. L. M. Campuzano (Spanish Banking Association) | Stable inflation centred around levels of 2.0%…A scenario dominated by rising inflation is as complicated as one where deflation and potential low economic growth can create a vicious circle difficult to exit. Especially in a context of high indebtedness.
Lately there is growing criticism of the ECB over its supposed “democratic deficit”. It is being accused of oversteppping the mark by being obliged to take “political decisions”.
I believe central banks don’t control long-term rates – which are decisive for investment – and that they can influence them in what we would call normal circumstances, namely when GDP is expanding and inflation is at its optimum level. The central bank trys to control the private market’s expectations, but it doesn’t always succeed.
J.L Campuzano (Spanish Banking Association) | What is clear from ECB President Mario Draghi’s speech last Thursday is that investors consider we are closer than farther away from the start of monetary normalisation against a backdrop of economic optimism.