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ECB Barrel Scraping Getting Louder?

10 March 2016

Grant Lewis
, 
Chris Scicluna

There was never any doubt that the ECB would ease policy at today’s Governing Council meeting. In the event, however, it beat expectations, adjusting policy in several different ways:

  • Further rate cuts
  •  Increased asset purchases
  • More, and more innovative, long-term liquidity operations

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Euro banks' equity valuations - credit still to catch up?

04 February 2016

Jakub Lichwa
, 
Grant Lewis
  • Equity valuation of European banks hit its lowest point since 2 August 2012.
  • This drop in valuations reflects what appear to be growing fears around the health of the banking sector in Europe.
  • But while equity valuations have tanked, the move in CDS has been much less pronounced, and is still a far cry from the 280 level hit on 2 August 2012.

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Market-testing the euro area recovery

03 February 2016

Chris Scicluna
  • While the euro area economic recovery continues for now, heightened global financial market turmoil risks denting business and consumer confidence and hitting GDP growth.
  • Given the weakened inflation outlook the ECB will ease policy again in March. But whatever is announced seems unlikely to be transformative.

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The BoJ and its (sort of) negative interest rate

29 January 2016

Grant Lewis
, 
Chris Scicluna
  • Kuroda once again pulled a headline-grabbing rabbit out of the hat, with the announcement of a ‘negative’ interest rate on excess reserves.
  • But, as ever with recent BoJ announcements, the devil is in the detail.
  • And today’s announcement could well mark the beginning of the end for a QQE programme that has proved successful in raising underlying inflation.

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Japan: Recovery in recess

11 August 2015

Chris Scicluna
, 
Emily Nicol
  • The BoJ appears overoptimistic about Japan’s economic outlook and we expect the 2% inflation target to remain well out of reach over the coming couple of years. 
  • But the economic recovery is probably just in temporary recess and we do not expect a return to recession. And we think the BoJ will continue to resist the urge to ease policy further.

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