Posts Tagged ‘eurozone’

Credit figures confirm our 2016 euro growth forecast

Euro area bank credit flows increased again in February, in line with other indicators such as the ECB’s Bank Lending Survey (see the chart below) and quite remarkably given the challenging financial context in February. We continue to believe that the credit cycle has legs. Moreover, we expect the ECB’s new Targeted Long Term Refinancing […]

Euro area business surveys regain some momentum in March

Euro area business surveys (PMIs and IFO) showed renewed signs of life in March after the drops seen in the first two months of the year. Surveys also highlighted the contrasting trend between the manufacturing sector, dented by a subdued external environment, and the services sector. Flash PMIs above consensus expectations According to Markit’s preliminary […]

The ECB delivers a bigger-than-expected package to support bank lending

The ECB’s Governing Council delivered a comprehensive policy package that exceeded market expectations by a large margin. The 10bp deposit rate cut to -0.40% was expected but other measures were not, including a 5bp ‘refi’ rate cut (to 0%), a EUR20bn increase in the pace of monthly asset purchases (to EUR80bn), the inclusion of non-bank […]

Euro area: good and bad reasons to worry about the euro area outlook

Although we have left our forecasts for euro area GDP unchanged – 1.8% growth expected in 2016, well above trend – downside risks have intensified in recent weeks. There are both good and bad reasons to worry about the recovery but, in short, the euro area can continue to do well despite sluggish global growth, […]

Political uncertainties weighing on the markets

One answer to cope with political uncertainty: diversification Comparing investors to tightrope walkers is obvious: both are constantly striving to perform a tricky balancing-act. When making decisions, investors are seeking to find the ideal balance between generating a good return and shouldering risk against a backdrop of uncertainties.The two crises involving Greece and China remind […]

Eurozone economy picking up some momentum

If we look back to our core economic scenario outlined in November last year, three of the key developments we had pinpointed already materialised in January this year: firm anchoring of US growth; quantitative easing at the European Central Bank (ECB); resurgence of systemic risk in the eurozone. On the latter score, the constructive talks […]

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, […]

Three key developments already shaping 2015

Economies throughout the industrialised world have been benefiting from the slump in the price of oil. All the liquidity being injected via the European Central Bank’s quantitative easing programme is providing a welcome pillar of support for the eurozone. On the downside though, the outcome of Greece’s general election has reignited the risks of a […]

Three of the seven key developments for 2015 are already shaping investment strategy

Eurozone policy mix remains incomplete The European Central Bank had already signalled its intentions and did not disappoint investors when, on 21 January, it announced a plan to acquire sovereign debt to a minimum of €60bn monthly up to September 2016.To understand what this level of quantitative easing can do to boost the eurozone economy, […]

Finally, QE from the ECB

At Thursday’s press conference, Mario Draghi has announced the ECB’s QE programme, labelled Expanded Asset Purchase Programme (EAPP), which, in several aspects, surpasses the expectations fostered by the drip-drip of leaks in the days running up to the meeting. The main features are: The ECB will buy bonds issued by euro area central governments, agencies […]

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