Draghi Sharpens “Three Arrows” for Europe

When the European Central Bank’s Governing Council convenes tomorrow in Frankfurt, there will be plenty of talk about Mario Draghi’s recent speech at Jackson Hole. Not only did this open the door to a large-scale quantitative easing (QE) programme, it may in time be seen as a pivotal moment in the evolution of the euro area’s policy framework as it attempts [...]

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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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Global Investing and the European Enigma

Equity investors are struggling to figure out how to approach the European enigma. It’s clear that a recovery is brewing, but there’s still too much uncertainty for comfort. In our view, distinguishing the European context from that of the US or Japan can help point the way toward unravelling the puzzle.

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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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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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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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Chastened ECB Wary of Premature Monetary Tightening

Cyclical indicators have improved, but the economic and financial backdrop in the euro area remains fragile. The ECB has clearly learned from past mistakes and is keen to avoid a premature tightening of monetary conditions.

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Is the Euro “Dangerously High”?

Jean-Claude Juncker’s view that the euro is “dangerously high” isn’t shared by the European Central Bank (ECB). As long as this is the case, the single currency may continue to defy fundamentals and act as an unwelcome headwind for an economy still struggling to break out of recession.

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Euro-Area Periphery Faces More Pain to Complete Rebalancing

Most peripheral euro-area countries have significantly improved their competitiveness recently, but more needs to be done. With currency devaluation ruled out, further downward pressure on labor costs is likely, which will probably deepen and prolong recessions and interfere with fiscal adjustment.

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