Good morning, and welcome to our renewed coverage of the global economy, financial markets, the eurozone, and business.
It’s a tough time to be a central banker, especially in the Eurozone as Covid-19 has driven the economy into recession and inflation into negative territory.
So all eyes are on European Central Bank It meets to set monetary policy, issues its new economic forecasts, and confronts the press.
The European Central Bank may not take new measures today. However, you can expect to question the euro’s recent rally (it reached its highest level since April 2018 last week), and inflation fell to -0.2% last month for the first time since 2016.
Martin Arnold of the Financial Times thought the president Christine Lagarde It may indicate a stronger EUR – which could be an attempt to undermine the currency down to trigger inflation.
For the first time in more than two years, the European Central Bank is expected to include a reference to the exchange rate in its “introductory statement” to present the results of its monetary policy meetings.
While her comment on the EUR is likely to be nice, the wording will be closely examined – especially as this week’s meeting is unlikely to result in major policy changes.
The European Central Bank will also be questioned about the US Federal Reserve’s new strategy with a medium inflation target (AIT) – giving itself room to wave to continue pumping stimulus into the economy for a longer period. Will Europe Follow? (Even though Euro-Zone inflation is at -0.2%, it is miles away from the 2% target.).
Deutsche Bank’s Jim Reed predicts that Christine Lagarde will pave the way for more stimulus measures by the end of the year:
Regarding what we expect today, our European economists think so The policy position will not change, but the European Central Bank will firmly reinforce its contacts with a peaceful message, He accepted further easing in December with the expansion of the asset purchase program.
This easing for December will coincide with the release of 2023 inflation forecasts to ECB employees, which could form the basis for a policy change.
European markets are looking calm ahead of the ECB meeting, after the strong rally on Wall Street last night:
The pound is crawling higher this morning, up a third of a cent at $ 1.303. But it could be volatile during the day, as the United Kingdom and the European Union hold emergency talks today on Prime Minister Boris Johnson’s plan to undermine parts of the Brexit divorce treaty.
We also found out how many Americans filed for unemployment support last week, a major statistic as the US presidential election approaches. Economists expect there will be 846,000 new claims, down from 881,000 the previous week.
schedule of work
- 12.45 PM GMT: European Central Bank interest rate decision
- 1.30pm GMT: European Central Bank President Christine Lagarde press conference
- 1.30pm GMT: Weekly US unemployment numbers
- 4 PM GMT: Weekly US oil inventories
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