Posts Tagged ‘inflation’

The Fed is likely to wait until September before hiking rates

Read full report here In Friday’s report on income and consumption, data were also published on the PCE deflator, the price measure targeted by the Fed in gauging inflation. The core PCE price index (excluding food and energy) increased by 0.1% month-on-month (m-o-m) in March, in line with consensus expectations. On a year-on-year (y-o-y) basis, core […]

ECB policy meeting: different things to worry about

Read the full report here The ECB is facing a complex, albeit not completely negative, macro-financial environment following its impressive policy package announcement on 10 March. Nevertheless, barring some new shock, beyond some fine-tuning measures, the ECB should remain on hold at its next policy meeting on 21 April. Instead, we expect different aspects of […]

United States: core PCE inflation picked up markedly in January

In Friday’s report on income and consumption, data were also published on the Personal Consumption Expenditures (PCE) deflator, the price measure targeted by the Fed. Following higher-than-expected CPI numbers the week before, a relatively marked monthly increase was also expected last Friday. However, the move was even more pronounced than expected and data for the […]

Euro area: large drop in core inflation delivers the final blow to the ECB

Not only were today’s preliminary inflation figures for the euro area very weak, but the breakdown raised new concerns over the underlying trend in consumer prices – a potential headache for the ECB, independently of recent developments in the real economy and financial markets. According to Eurostat’s estimates, euro area HICP inflation fell to -0.19% […]

Swiss inflation: in negative territory, but no sign of a deflationary spiral

According to Swiss Federal Statistical Office, consumer prices in Switzerland remained broadly stable at -1.3% y-o-y in January, in line with consensus expectations and thus marking the seventeenth consecutive month in negative territory. Core inflation (headline CPI excluding food, beverages, tobacco, seasonal products, energy and fuels) was stable at -0.9% y-o-y in January. The breakdown […]

Euro area: little evidence of large second-round effects of oil on core inflation

Draghi’s latest hint at fresh monetary easing heralds a six-week period of waiting and guessing what the next measures might look like. One critical factor driving the decision will be the ECB’s assessment of indirect effects of lower oil prices on inflation. Draghi promised “a more comprehensive picture” of those various transmission channels at the […]

2016: growth, but no momentum

Growth is gradually normalising as cyclical weaknesses abate, and we expect fairly healthy rates of economic growth in developed economies in 2016. Moreover, we believe that an innovation shock could boost growth in the coming years — and indeed that a technological innovation shock has already begun, although its effects are still concentrated on certain sectors for now.

Deflation risks, QE and ‘Grexit’ revealing the cracks in the eurozone edifice

Inflation is very subdued throughout the eurozone. But it is not so low just because oil prices have been nosediving. Depressed aggregate demand acts as a fertile breeding ground for a deflationary spiral to take root. Confronted by this risk, the ECB has at long last provided its unconventional response to meet this challenge. However, […]

Mario Draghi admits that the European Central Bank’s options are limited

In May’s press conference, Mario Draghi created several expectations: 1. Further refi rate cut: “we will stand ready to act if needed” 2. The deposit rate, currently at 0%, could be brought negative: “we are technically ready” 3. Joint measures could be taken with the European Investment Bank (EIB) to revive the ABS market in […]

Euro area: deflation is looming

According to Eurostat’s flash estimate, euro area annual inflation is expected to be 1.2% in April, down from 1.7% in March and well below consensus expectations of 1.6% y-o-y. It is the largest monthly fall since May 2009 and also the lowest level since February 2010. Moreover, the euro area’s core annual inflation (inflation excluding […]

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