Bold ECB Plan Fails to Quell QE Talk

This week, the European Central Bank (ECB) announced a bigger and broader package of stimulus measures than anyone anticipated. But don’t hold your breath for a material near-term boost to growth or inflation in the region.

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New Dawn for Peripheral Europe?

Darren Williams (pictured) and Dennis Shen When Mario Draghi pledged to do “whatever it takes” to save the euro in July 2012, nobody expected things to change so quickly. Peripheral bond markets have since turned around sharply, supporting the European economic recovery. But can the improvements be sustained after countries exit their bailouts?

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Bank of England’s Growth Focus Might Stir Inflation Ghost

The Bank of England appears to have moved the goalposts. After 30 years of focusing almost exclusively on inflation, monetary policy is now being more explicitly directed toward generating faster growth and lower unemployment.

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Expect Business as Usual After the German Election

Many pundits believe the German federal election on September 22 will prove a turning point in the sovereign debt-crisis. We are less convinced.

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ECB’s Attitude to Portugal Raises Questions about Bond-Purchase Programme

Political upheaval in Portugal has thrown the spotlight on the European Central Bank’s (ECB’s) bond-purchase programme, known as Outright Monetary Transactions (OMTs). Many are asking whether the ECB is ready to support the market if yields rise further. And if not, why not?

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Will Carney Light Fireworks at Bank of England?

On July 1, former Bank of Canada governor Mark Carney will replace Sir Mervyn King as governor of the Bank of England. For many observers, this will herald a new dawn in the conduct of British monetary policy. We agree, but think the process will be more evolutionary than revolutionary.

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Should Euro-Area Exporters Worry About a Weaker Yen?

Darren Williams (pictured) and Guy Bruten As the yen continues to plummet, exporters around the world are growing concerned that Japanese rivals may gain a competitive advantage. But our analysis suggests that the euro-area economy may not be quite as vulnerable as widely perceived. 

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Likely Rate Cut from the European Central Bank Will Be No Magic Wand

Disappointing April data suggest that the ECB is set to cut the refinancing rate at Thursday’s Council meeting. This is likely to have limited economic impact but  could encourage expectations of more creative policy action later, helping to take some upward pressure off the euro.

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Cyprus Averts Disaster, but the Price is High

The European Union’s last-minute deal with Cyprus has headed off bankruptcy for now, but comes at a heavy price for uninsured bank depositors. Meanwhile, the move to impose losses on private creditors and growing complacency among policymakers could be storing up trouble for the future.

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Little Cyprus Sparks Big Contagion Fears

The situation in Cyprus is still very fluid and very serious—perhaps more so than in Greece last year. While the country may be too small to have a meaningful direct impact on the rest of the euro area, the big issue for markets is the potential for contagion to more systemically important countries.

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