The September 2014 edition of Perspectives magazine is out.

World economy becoming increasingly desynchronised

Mario Draghi shows the world the ECB is geared towards action

Fresh measures aim at boosting the ECB’s balance sheet by some €1000bn.

USA: retail sales started Q3 on a soft note

We are not overly worried by today’s soft set of data. We forecast that consumption will grow by some 21⁄2% q-o-q annualised in Q3, a similar growth rate to what was recorded in Q2. And our scenario that economic growth will settle at around a robust 3% in H2 2014 remains unchanged.

ECB press conference

The euro area recovery will remain fragile. Further unconventional monetary policy measures will thus be required over a six-month period.

EU: sanctions against Russia

Russian crisis could dent the fragile euro area recovery through several channels: trade, energy and the banking sector.

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US consumer spending bounced back strongly in August

Real personal consumption expenditure increased by a strong 0.5% m-o-m in August, in line with consensus expectations. Moreover, July’s fall was revised for the better (from -0.2% m-o-m to -0.1%), whilst June’s increase was revised up from +0.2% to +0.3%. As a result, between Q2 and July-August, consumer spending grew by 1.9% annualised, admittedly a […]

Euro area: tentative signs of stabilisation in monetary aggregates

Recent ECB measures and the end of the AQR and bank stress tests in October might ease credit constraints. Nevertheless, the impact on the real economy is unlikely to materialise before the beginning of 2015. Rebound in M3 growth The annual growth rate of euro area M3 monetary aggregate increased from 1.8% y-o-y in July […]

Euro area: gloomy sentiment threatens recovery hopes

The Ifo business survey recorded its fifth consecutive monthly decline in September and reached its lowest level since April 2013. Indeed, the overall business climate indicator dropped from 106.3 in August to 104.7 in September, much lower than consensus expectations (105.8). The fall was mostly due to a decline in the expectations index (from 101.7 […]

Disappointing first attempt to boost credit by the ECB

The ECB announced today that it has allotted €82.6bn to 255 banks in its first TLTRO. As such, the first allotment is much lower than the €150bn expected by consensus. The total potential amount of liquidity offered by the ECB in the first two operations (18 September and 11 December) is close to €400bn. The […]

World economy getting more and more out of sync

Against the backdrop of US and European economic cycles drifting ever further apart, monetary policies being pursued by the European Central Bank (ECB) and the US Federal Reserve have also been following quite different paths. In a drive to stimulate growth and counter deflationary risks, ECB President Mario Draghi is indeed moving from words to […]

Mario Draghi shows the world the ECB is geared towards action

Mario Draghi surprised the world by announcing three sets of measures. Official interest rates are to be lowered by 10bp each, the ABS purchasing programme will start in October 2014, and a new covered bond purchase programme will also be launched. The Governing Council (GC) was not unanimous on yesterday’s decision. Despite dissension, the GC […]

Euro area: deflationary environment continues to prevail

In August, euro area headline inflation moved further away from the ECB target, recording its 90th consecutive month below 2%. Meanwhile, monetary aggregates and surveys on activity painted a weak picture, suggesting a fragile recovery after a disappointing H1. Thus, these developments show that deflationary forces are still at play in the euro area. A […]

USA: very disappointing consumption numbers in July

July consumption data were very disappointing. However, as fundamentals are pointing to robust growth in consumer spending, we are reluctant to cut our Q3 forecasts by too much. Overall, we remain optimistic on consumption and overall GDP growth in H2. Real consumer spending contracted in July Real personal consumption expenditure declined by 0.2% m-o-m in […]

ECB: Mario Draghi breaks with taboos

The ECB’s president, Mario Draghi, called for all available instruments to be used – demand side, supply side policies, structural reforms and monetary policy – to avoid the threat of the euro area falling apart. Indeed, the German Ifo business survey continued its downward trend in August, in line with other business surveys (PMI) and […]

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