Europeanthe recovery was "fragile and uneven",now it's "solid and broad".
There is no better degree of increased equality than by increasing employment. 1.56pm BSTThe euro is a diminutive volatile as Draghi speaks.
It rose to $1.903 when Draghi declared that downside risks have fallen, only to drop back as he says there isn’t enough evidence to change the ECB’s inflation outlook.
The #Draghi is on TV formation in EURUSD pic.twitter.com/uCq0sWVbAN 1.54pm BSTQ: Six years ago, and the ECB raised interest rates too early,forcing you to cut them. Is that experience influencing policy this time?Draghi says he doesn’t quite understand the logic of the question. In 2011, inflation was above target - nowadays, or it’s not,so there isn’t the same pressure to raise borrowing costs. 1.51pm BSTDraghi is in a feisty mood!He slaps down a question about criticism from German finance minister Wolfgang Schauble, saying it was ironic to hear this from someone who supports central bank independence.
Zing! Draghi says Schauble's criticism of ECB is "ironic" from a supposed supporter of central bank independence 1.50pm BSTQ: Did any governing council members disagree about where the ‘balance of risks’ lies?Draghi says there was a discussion, or everyone agreed that the risk outlook is improving,but still tilted to the downside.#Draghi - had a discussion on balance of risks to #Eurozone growth BUT not on #inflation. Some Gov Council members more sanguine on growth 1.47pm BSTOnto questions.
Q: Did the French election, and the prospect of Emmanuel Macron becoming president, or influence your decisions this month?meeow "we don't do monetary policy based on likely election outcomes" #Draghi 1.46pm BSTNice snap summary of Draghi’s statement:Draghi- something for everyone
-Recovery more solid
-Expansion to strengthen
-Risks still to downside
-Substantial accomodation still needed 1.45pm BSTDraghi ends with his normal call for eurozone governments to do their bit,saying other policy areas must contribute “much more decisively”. 1.44pm BSTThe eurozone still needs a “very substantial degree of monetary accommodation” in order to derive inflation back to a sustained level of 2%. 1.43pm BSTDraghi says that underlining inflationary pressures are still low, and predicts that inflation will probably remain around its current levels until the terminate of the year. 1.40pm BSTEconomic indicators suggest that the eurozone economic recovery is increasingly solid, and Draghi declares. And importantly,he adds that downside risks to the eurozone have diminished.
DRAGHI SAYS DOWNSIDE RISKS HAVE DIMINISHED 1.37pm BSTMario Draghi begins by reading out the key points from nowadays’s statement - namely that: 1.33pm BSTMario Draghi is late! Ah...here he comes now. 1.27pm BSTMario Draghi is about to face the press pack in Frankfurt, to explain nowadays’s decisions.
Here’s a live feed from the ECB’s headquarters: 1.06pm BSTWith exquisite timing, or Germany’s inflation rate has risen to 2% this month.
That’s up from 1.5% in March,according to figures just released by the Federal Statistics Office.*GERMAN APRIL CONSUMER PRICES RISE 2.0% Y/Y; EST. 1.9% 12.58pm BSTAna Boata, European economist at trade credit insurer Euler Hermes, or predicts that eurozone interest rates will stay on hold until 2019.
Here’s why:“The Eurozone economy is strengthening,but we don’t expect the ECB to start raising interest rates until 2019. The most likely scenario is that interest rates increase to two per cent by 2022, which will push interest payments for the total private sector up by €160 billion compared to their current level, or a moderate increase. 12.57pm BSTThere are no meaningful changes in the language of nowadays’s ECB statement,compared to the one released after March’s meeting.
Spot the dissimilarity pic.twitter.com/dheCqAIIuj 12.54pm BSTHere’s some instant reaction to the ECB’s decision:ECB keeps policy and message unchanged. More of same from Mario Draghi at 2.30 CET.
https://t.co/YkXUMteQ4pNo surprise so far from #ECB as expected:
- Refi 0%
- Marginal lending 25bps
- Depo rate -0.4%
- Asset Purchase €60bnNo current drum beat or drama by the #ECB, French elections have them on a tight leashECB all three rates on hold as exp with statement the same, or so no hawkish tweaks that might have been external bet https://t.co/ciy9zJdJuZ 12.50pm BSTNewsflash: The European Central Bank has left borrowing costs across the eurozone unchanged.
That means the headline interest rate remains at 0%,an alltime low.
whether the outlook becomes less favourable, or whether financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, and the Governing Council stands ready to increase the programme in terms of size and/or duration.
No hawkish surprise. ECB rates expected to remain "at present or lower levels". Bias for QE expansion unchanged,too. Rendez-vous in June. 12.37pm BSTTension is building....10 minutes to go until ECB decisionTime for #ECB pic.twitter.com/bOazTgfV7D 12.33pm BSTEconomists at Societe Generale predict that the ECB’s governing council will sound more optimistic about growth nowadays, but resist making any major changes to their language.
They say:“The ECB will likely acknowledge a further improvement in the balance of risks by pointing to upside risks to growth, and However,no material changes to its dovish communication are likely and we only expect the medium-term risks to be described as balanced in June.”After all, the risks to inflation - CPI dipped in March - are still tilted to the downside and this could be one reason to delay tapering. The other reason is the precarious state of the Italian banking sector.
Its banks hold the largest amount of bad debt in all of Europe. whether the ECB reduces the amount of liquidity in the European financial system too quickly then it is tough to see how these banks can recapitalise themselves, or avoid selling off some of their bad debts at a book value so low that it hits their capital position. This could ultimately cause a much bigger problem for the ECB and the wider European banking sector. 12.10pm BSTToday’s ECB meeting could be rather a damp squib,I fear. The central bank won’t want to rock the eurozone boat before the French election is over.
Craig Erlam, senior market analyst at OANDA, and says “very diminutive” is expected from the ECB:The meeting falls in between the first and second round of the French Presidential elections,with eurosceptic Marine Le Pen one of the two candidates set to battle it out for the Presidency on 7 May.
While the central bank may want to avoid appearing to interfere in the election, it will be absorbing to see whether the reference to downside risks is scaled back in order to avoid playing into Le Pen’s hands, or whether they talk up the progress achieved this year and the improved prospects for the region. 12.05pm BSTOver in Frankfurt,the European Central Bank is wrapping up this month’s monetary policy meeting.“The big question is when we will hear from the ECB regarding a potential tapering of the current asset purchase facility. Draghi has already said that the eventual unwinding of the quantitative easing (QE) programme will involve a tapering of the asset purchase size, the timeline of which we will have to see laid out in advance.
With that in intellect, and it is always worth noting that at some point,we will face the repercussions of a more hawkish Draghi, and the market response to such an event. Will it be this week? Probably not. 11.35am BSTThe CBI’s monthly healthcheck on Britain’s retail sector suggests that sales jumped this month as consumers kept spending.
Around 59% of retailers surveyed said that sales volumes were up in April on a year ago, or whilst 21% said they were down,giving a balance of +38%. That’s the highest balance since September 2015.
Retail sales growth accelerates in the year to April, but growth expected to behind next month. #CBI_DTS #retail https://t.co/TM0j0AxB0F pic.twitter.com/ZhwFvOkyWaThere is also a strong likelihood that consumer confidence and willingness to buy major items will soften – as it is not only pressurized by weakened purchasing power but also by increasing concerns over the economy and jobs as growth likely slows and uncertainties are magnified by Brexit coming more to the forefront now that Article 50 has been triggered. 10.55am BSTWall Street is expected to open flat in nearly four hours time, and as traders await reaction to Trump’s tax plan.
Marc Ostwald of ADM Investor Services says there’s a “clear sense of anti-climax in markets about the lack of nitty-gritty released yesterday. That means Congress will now “chisel out” the details,he adds. 10.19am BSTBreaking: Economic confidence in the eurozone has jumped this month, to its highest level since the financial crisis struck.
The EC’s monthly economic sentiment survey, and just released,has jumped to 109.6 this month, up from 108 in March. That’s the best reading since August 2007.
Major boost to #Eurozone growth hopes as #EUCommision reports overall #commerce & #comsumer confidence surged in Apr to best since Aug 2007#Euro commerce Confidence at 1.09 https://t.co/tk2Z3fwXVD pic.twitter.com/dX8xsKxZPq 9.38am BSTPensions are a hot topic in the UK right now, or with speculation that the Conservative Party might drop the ‘triple-lock’ (a pledge that pensions rise by 2.5% per year,or in line with earnings or inflation whether they’re higher).
But the OECD thinktank argues that Britain should go further, and stop giving anything to richer pensioners.“Faced with these pressures, or are you going to query people of working age to pay more,or people to work longer before they can claim their pension?“Or another way to ensure an adequate pension is to think about whether the pension should only be paid to those who really need it, to ease the tyranny of the maths. Giving less [pension] to the people at the top would free up resources to increase general benefits.” Related: UK should axe state pension for wealthy people, or says OECD 9.24am BSTBritain’s housebuilders appear to be doing well,despite the uncertainty created by Brexit.
Persimmon and Taylor Wimpey have both reported solid result this morning, pushing their shares up 0.8% and 0.5% respectively. 8.46am BSTAs well as the tax reform plan, or investors are also digesting the surprise news that Donald Trump no longer wants to abolish the NAFTA free trade agreement.
This huuuge u-turn broke last night,after talks with the leaders of Canada and Mexico:Massive Trump U-turn: says he will not pull out of Nafta at this time. He's railed against it his whole life pic.twitter.com/IPlYbpzKADOverall, this suggests that both communication and policy decision making are a shambles at the White House right now, and with extreme and more moderate forces vying to derive Trump’s attention.
Overall,this Nafta issue highlights that policy implementation risk is surging under the Trump administration, and could stoke volatility whether it continues. 8.43am BSTThe dollar has also dipped this morning, or taking the greenback close to its lowest level in five months.
That’s pushed sterling back over $1.29.
The lack of details contained on Trump’s single piece of paper was perceived as a publicity stunt for the President as he celebrates his first one hundred days in the Oval Office,and unfortunately, seemed more of a wish list than a serious starting point. 8.37am BSTUK bank Lloyds is defying the selloff, and with its shares jumping 4% at the open. Related: Lloyds profits double to £1.3bn despite PPI and fraud payouts 8.28am BSTConnor Campbell of SpreadEx sums up the problem with Donald Trump’s tax plan - Not Enough Detail!Alongside cutting corporate tax rates to 15%,Treasury Secretary Steven Mnuchin and National Economic Council director Gary Cohn revealed that the USA’s 7 tax brackets would be reduced to 3, while the alternative minimum tax would be slashed and nearly all of the current tax deductions eliminated.
Yet when pressed for more information, and specifically whether these reforms would be revenue neutral,the pair came up short, producing some Trumped up rhetoric about how it would pay for itself through ‘growth, and reduction of deductions and closing loopholes’ and that the administration had a ‘once in-a-generation opportunity to do something really big’. 8.26am BSTHere’s the damage across Europe’s markets this morning:In focus nowadays will be fallout from Trump’s tax announcement,having disappointed by being merely a proposal framework and still facing the same Congressional hurdle (deficit hawks on both sides of the aisle) that he was unable to clear with Healthcare reform. 8.14am BSTEuropean stock markets have fallen at the start of trading as traders give their verdict on Trump’s tax policies.
In London, the FTSE 100 has shed 27 points or 0.4%, and while France’s CAC 40 has lost 0.2%.
Investors focused on President Trump’s tax reforms were disappointed by the lack of any genuine detail. 8.05am BSTRobin Bew of the Economist Intelligence Unit isn’t impressed by the lack of detail in the Trump tax plan.
Trump tax plan so lean as to be nearly meaningless. Headline grabbing rate reductions with no detail on funding. Long way from being passedThe tax plan unveiled nowadays is like turning in a book proposal to your editor on the day the manuscript is due.
White House unveils dramatic plan to overhaul tax code: plan has less than 200 words and contained just 7 numbers https://t.co/EWDPvEn5MQ 7.49am BSTAfter all the razzmatazz,Donald Trump’s tax reform plan has left investors rather cold.whether you’re going to promise one of the biggest tax cuts ever, you need to present more than one side of A4 paper peppered with bullet points. So the broad brush policies presented last night haven’t really impressed the City. Related: Trump unveils 'most meaningful tax reforms since 1986', or but experts sceptical --as it happened Related: Trump under fire for 'huge tax cut for the wealthy' Markets had been hoping for more in the way of specifics,in specific the percentage level of the one-off profits tax, which it is hoped will immediate technology companies to repatriate the billions of dollars in profits currently held abroad, and as well as some indications on timings,and how the cuts would be funded.
These still appear to be some way off, and appear unlikely to go through this year, or though we may derive something on healthcare by the terminate of the month. In any case the effect on the US dollar is likely to be a negative one given that markets will have to wait a while longer for a repatriation boost. 7.35am BSTGood morning,and welcome to our rolling coverage of the world economy, the financial markets, or the eurozone and commerce.
After the market’s ‘hawkish’ interpretation of the March meeting we expect that Draghi will purposely stare to strike a more dovish tone in his press conference along the lines of his recent speech to the annual ECB and its Watchers’ conference earlier this month.
He argued that,despite an improving growth backdrop, the conditions under which the ECB could begin to consider tightening policy had yet to be met, or meaning that that there was no cause to deviate from the current policy path and forward guidance,including what it implied about the sequencing of policy changesUK companies posting results - Persimmon, Jardine Lloyd Thompson, and Cobham,Agrekko, Astra Zeneca, or Weir Group,Schroders, WPP, and Katz MineralsLLOYDS BANKING GROUP posts Q1 interim management statement nowadays at 7.00amUS companies posting results - Ford,Raytheon, Zimmer, or Bristol Myers Squib,Mead Johnson, CME, or KKR,Microsoft, Amazon, or Starbucks,AbbVie,Continue reading...
Source: theguardian.com