Meldungsübersicht

Is the Euro Area hitting capacity constraints?

  • Euro Area GDP growth slowdown is likely to extend into the second quarter, despite a rebound of industrial production in May
  • Capacity utilization has reached levels well above the long-term average and close to 2007
  • Insufficient demand and labor shortages are the most significant factors limiting production
  • Investment activity in the Euro Area has, not yet, reached pre-crisis levels
  • Labor productivity growth has been remarkably similar between the pre- and post-crisis period, though, at markedly lower employment growth

ECB Forum on Central Banking: Price and wage-setting in advanced economies

  • Presentations and discussions hoover around the “Phillips curve”, the pivotal concept justifying the existence of central banks
  • Draghi stresses that wages are finally rising and the Phillips curve is strengthening
  • The Phillips curve is “alive and well but needs to be found” as measurement errors have likely overshadowed inflation signals
  • Nowadays, Phillips curves contain inflation expectations which should be influenced more directly in breaking the “veil of inattention”

The divergence of two central banks: Fed and ECB outline paths of monetary policy normalization

  • The Federal Reserve Bank (Fed) increases key interest rates and signals a faster rate hiking cycle
  • The European Central Bank (ECB) adjusts its forward guidance on interest rates expecting rates to remain at their present levels at least through the summer of 2019
  • The ECB’s net asset purchases (QE) will end this year after a reduction of net asset purchases to 15 billion EUR per month from October onwards
  • The Euro Area continues to show lower potential growth and an unemployment rate still above the natural rate of unemployment

Eurozone growth and ECB preview

  • Eurozone growth slowdown in early 2018 is driven by declining export growth
  • Growth remains strong in Spain and Austria while decelerating in Germany, France and Italy
  • Higher energy prices cause a spike in Eurozone inflation at 1.9 % in May
  • ECB’s Praet gave a lecture on interest rates and some signals about the upcoming ECB meeting for the attentive reader
  • Italy’s debt sustains a large interest rate shock as long as the budget is kept under control.
  • Debt sustainability depends on fiscal discipline and continued primary fiscal surpluses.
  • Public debt is predominantly held by residents; primarily by financial institutions and the central bank.

Eurozone

  • In Germany, GDP growth slowed in line with the total of the Euro Area in Q1 2018
  • The next Euro crisis won’t be a balance of payments crisis
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Top Meldungen

UNIQA Capital Markets Weekly
      

Is the Euro Area hitting capacity constraints?

  • Euro Area GDP growth slowdown is likely to extend into the second quarter, despite a rebound of industrial production in May
  • Capacity utilization has reached levels well above the long-term average and close to 2007
  • Insufficient demand and labor shortages are the most significant factors limiting production
  • Investment activity in the Euro Area has, not yet, reached pre-crisis levels
  • Labor productivity growth has been remarkably similar between the pre- and post-crisis period, though, at markedly lower employment growth

UNIQA Capital Markets Weekly
      

ECB Forum on Central Banking: Price and wage-setting in advanced economies

  • Presentations and discussions hoover around the “Phillips curve”, the pivotal concept justifying the existence of central banks
  • Draghi stresses that wages are finally rising and the Phillips curve is strengthening
  • The Phillips curve is “alive and well but needs to be found” as measurement errors have likely overshadowed inflation signals
  • Nowadays, Phillips curves contain inflation expectations which should be influenced more directly in breaking the “veil of inattention”

UNIQA Capital Markets Weekly
      

The divergence of two central banks: Fed and ECB outline paths of monetary policy normalization

  • The Federal Reserve Bank (Fed) increases key interest rates and signals a faster rate hiking cycle
  • The European Central Bank (ECB) adjusts its forward guidance on interest rates expecting rates to remain at their present levels at least through the summer of 2019
  • The ECB’s net asset purchases (QE) will end this year after a reduction of net asset purchases to 15 billion EUR per month from October onwards
  • The Euro Area continues to show lower potential growth and an unemployment rate still above the natural rate of unemployment