us fed and european central bank go their separate ways
Last Updated : GMT 09:07:40
Egypt Today, egypt today
Egypt Today, egypt today
Last Updated : GMT 09:07:40
Egypt Today, egypt today

US Fed and European Central Bank go their separate ways

Egypt Today, egypt today

Egypt Today, egypt today US Fed and European Central Bank go their separate ways

European Central Bank
Frankfurt - Arab Today

Two of the world's biggest central banks are likely to find themselves with a bigger policy gap by the end of the coming fortnight

The European Central Bank (ECB) on Thursday will resist calls to start tightening policy against surging inflation but robust US jobs data on Friday could seal the case for another Federal Reserve hike the week after. 

So, let's say minus 0.4 per cent rates in Europe and more than 0.75 per cent in Washington.

With just weeks to go before contentious French and Dutch elections, the ECB will be keen not to rock the boat, so it is likely to give just a token nod to robust growth figures, steering clear of any policy hint that may give emerging populist movements ammunition.

A Reuters poll showed unanimity for no change.

But the balancing act may be more difficult than it looks.

With growth on its best run since before the financial crisis and inflation peeking just above the ECB's target, calls are mounting, particularly in Germany, for the bank to scale back its 2.3 trillion euro ($2.42 trillion) bond buying scheme and raise its negative interest rates.

Doves hold a comfortable majority among the policymakers, however, so any shift will come at the margins. In practice that could mean increased inflation forecasts, letting an ultra-cheap lending scheme to banks expire as scheduled, and dropping a reference to the risk that growth may disappoint.

Still, ECB President Mario Draghi will probably avoid any discussion about winding down asset buys, even pushing back on calls by some rate setters to tweak the ECB's guidance, giving up its reference to further rate cuts, a possibility markets have already priced out.

"If the French presidential election also passes without turbulence, and growth and inflation data remain solid, the ECB might turn more hawkish in its meeting on June 8," Reinhard Cluse, economist at investment bank UBS, said. "This would then leave the meeting on July 20 for preparing the markets for the tapering (off asset-buying) on September 7."

For now though, Draghi will stick to his line that the inflation surge is temporary, growth is fragile and political risks clouds the outlook, requiring stimulus, a Reuters poll of analysts showed.

Having tightened policy in 2011 just months before the euro zone debt crisis started spiralling out of control, the ECB will be desperate not to move too early, even if it risks being called out by some for moving too late.

US jobs

The Fed, meanwhile, must deal with what Draghi dubbed a high-class problem: solid growth, full employment and returning inflation.

Non-farm payrolls, due on Friday, are expected to show an increase of 186,000 jobs, probably enough to push the Fed to move. Unemployment benefits already fell to near a 44-year low late last month, indicating further tightening of the labour market.

Indeed, markets have now almost fully priced in a hike in March, the third since rates bottomed out at the height of the crisis, and two more increases could still come before the end of the year.

Robust jobs growth threatens to overheat the labour market, just as inflation is heading higher, with the Fed's preferred measure now in the upper end of the range central bank officials in December estimated would be reached this year.

Manufacturing growth is also firming, offsetting relatively weak consumer demand, good enough for even the most dovish Fed officials to argue for a hike sooner rather than later.

Soothing global growth fears, meanwhile, China is expected to report another set of strong figures for both exports and imports, indicating that even if overall growth is slowing and debt is rising fast, the slowdown remains under control, mitigating the risk for emerging market economies.

Indeed, China's factory activity expanded faster than expected in February, firming arguments for the central bank to raise short-term interest rates by a another 10 basis points as soon as March.

Data due on Wednesday are expected to show Chinese exports up by 10 per cent in February while imports could have risen by 20 per cent, a boon for countries like Australia, which supply China with raw materials.

Indeed, the Reserve Bank of Australia may signal on Tuesday that policy easing is done, given the economy's convincing rebound last quarter, rising commodity exports and a robust increase in household debt levels.

Source : Times Of Oman

egypttoday
egypttoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

us fed and european central bank go their separate ways us fed and european central bank go their separate ways



GMT 21:06 2017 Monday ,01 May

Will Smith at all-star Jazz Day in Cuba

GMT 06:25 2017 Monday ,27 November

Bali raises volcano alert to highest level

GMT 12:45 2018 Monday ,26 November

Israeli forces close entrance of village in Ramallah

GMT 12:14 2018 Monday ,08 October

HM King congratulates Ugandan President

GMT 13:49 2017 Thursday ,17 August

Alibaba posts 94% surge in quarterly profit

GMT 08:47 2017 Saturday ,10 June

CDD responds to 236 various incidents

GMT 00:31 2015 Saturday ,16 May

Canada plans 30% CO2 emissions cut by 2030

GMT 03:31 2017 Wednesday ,22 February

‘Man-made’ climate change a major woman’s problem

GMT 10:42 2017 Thursday ,16 November

Algeria FM leaves Cairo following tripartite meeting

GMT 11:08 2017 Tuesday ,03 October

Moscow, Riyadh willing to boost cooperation

GMT 08:40 2017 Thursday ,31 August

Bahrain Bourse daily trading performance

GMT 18:23 2017 Wednesday ,29 March

Ghazali's ALTARSHEED

GMT 08:22 2012 Wednesday ,04 July

Berenice Marlohe in racy shoot

GMT 15:47 2012 Friday ,20 January

2012 Honda Civic

GMT 10:37 2012 Friday ,13 July

2013 Ford Mustang

GMT 13:17 2011 Monday ,17 October

Hip hop stars to take centrestage at Yas Island

GMT 12:19 2017 Thursday ,27 July

Libya asks Italy to combat human trafficking

GMT 13:11 2017 Wednesday ,04 October

Jacques Dubochet (Switzerland), Joachim Frank (US)

GMT 12:26 2017 Thursday ,02 November

CAPRICORN (December22nd-January20th)

GMT 22:21 2017 Tuesday ,19 December

Haifa Wahby apologized for not receiving award

GMT 14:56 2017 Tuesday ,17 October

Palestinian cabinet decries Sinai terror attack
 
 Egypt Today Facebook,egypt today facebook  Egypt Today Twitter,egypt today twitter Egypt Today Rss,egypt today rss  Egypt Today Youtube,egypt today youtube  Egypt Today Youtube,egypt today youtube

Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©

Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©

egypttoday egypttoday egypttoday egypttoday
egypttoday egypttoday egypttoday
egypttoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
egypttoday, Egypttoday, Egypttoday