Amid rising interest rates imported from the United States and renewed tensions on sovereign debt due to the political crisis in Portugal, Mario Draghi yesterday had the difficult task of convincing the market that the ECB’s monetary policy will remain accommodative for a long period of time and that the Governing Council (GC) was still far from […]
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 […]
Thursday’s European monetary announcement only true surprise in terms of monetary policy was that the Governing Council appears to be seriously considering a negative deposit rate. However, as it is a two-edged tool, its impact on bank loans would be uncertain. No clear guidance to unlock the credit crunch A decision to buy asset-backed securities […]
The Cypriot parliament’s overwhelming rejection of the proposed levy on bank deposits has piled confusion upon uncertainty. In this note, we have looked back at the origins of the crisis, explored the kind of options left open to the authorities and pinpointed some of the consequences for investors. Origins of the crisis The attractiveness of […]
We continue to be very pessimistic on the likelihood of the euro area periphery getting out of recession by themselves or being towed out by their export sector. We therefore maintain our forecast of a rate cut in H2 and continue to think further non-orthodox measures will have to be adopted by the ECB in […]
The tone during yesterday’s ECB press conference was slightly less upbeat than January’s. Accelerating disinflationary process, the impact of the euro’s strength, the fragility of confidence and the downside risks to the economic recovery, give the impression that the Governing Council has not closed the door for further easing measures. As we continue to be […]
We continue to expect that the ECB will have to act decisively to help the depressed economies to recover. A rate cut could help, but more importantly unorthodox measures to reduce interest rates for consumers and businesses will be required. A decision to accept banks’ loans as a form of collateral could be an example […]
As expected, yesterday’s press conference did not bring any surprising announcements, but it was the occasion to confirm that the ECB definitely does not feel that the crisis is resolved. Decisive action is needed from governments, first of all on banking union next week. Nevertheless, yesterday’s speech has tended to reinforce our expectations of seeing […]
The Troika has finally reached an agreement regarding Greece. A second debt restructuring was almost necessary in order to bring Greece back on a sustainable debt path. However, due to the particularity of the euro area a haircut of principal was not an option. Two-thirds of the Greek public debt are currently detained by public […]
The November 2012 issue of Perspectives is now available for downloading. In this month’s strategy section, Pictet’s analysts explain that the weeks either side of the New Year are likely to be influenced by uncertainties surrounding the outcome of talks about tackling the fiscal cliff and raising the Federal debt ceiling in the US, which […]
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