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Fed patiently awaits greater clarity, Euro Area: No growth rebound occurred in Q4...

04 Feb

Martin Ertl

Fed patiently awaits greater clarityFed shifts to wait-and-see approach regarding future policy changes.Case for raising rates has weakened somewhat as inflation pressure muted and downside risks to an overall solid economic outlook intensified.January labor market report shows a strong job picture with the unemployment rate near historic lows and strong wage gains.Balance sheet normalization might be reached sooner rather than later, though, no comments were made about the equilibrium size.Last week the Federal Open Market Committee (FOMC) has made substantial changes to its monetary policy statement. In a nutshell, the FOMC has signaled to shift to a wait-and-see approach regarding future changes in its monetary policy rate. Whether the Fed will further increase the federal funds rate in 2019, as indicat...     » Weiterlesen


The dilemma of the ECB continues (Martin Ertl)

29 Jän

Martin Ertl

Leading survey-based indicators send warning signal for Euro Area business cycle.ECB leaves monetary policy stance unchanged. Risk for growth are tilted to the downside.Additional long-term refinancing operations (LTRO, TLTRO) would be a signal though imperfect tools to address a growth slowdown. In January, the composite purchase manager index (PMI), a major survey-based business cycle indicator, dropped to a new low (50.7 after 51.1). The index remained above the expansion threshold (50) and keeps indicating weak growth in economic activities in the Euro Area. The manufacturing and services sector components fell to 50.5 (after 51.4) respectively 50.8 (after 51.2). The German manufacturing PMI index tipped below the expansion threshold (49.9) for the first time since 2014 (Figure 1).In France, while the ...     » Weiterlesen


Decoding Euro Area’s inflation: on oil prices, labor costs & profit shares (Martin...

22 Jän

Martin Ertl

Final release shows Euro Area inflation at 1.7 % in 2018. Core inflation remained subdued at 1.0 % while rising energy prices drove inflation higher.Recent developments in oil prices as well as oil futures indicate energy price inflation to decline in 2019 and 2020.Wage growth has picked up gradually since 2017 being well-balanced among Euro Area economies and sectors. Profit shares are declining, thus, confidence in underlying inflationary pressures to emerge is rising. Last week on Thursday the European Statistical Office (Eurostat) published the final release of Euro Area inflation for the year 2018. Consumer prices in the Euro Area were 1.7 % higher than in 2017. The year 2018 started with an inflation rate at 1.3 % in January, peaked at 2.2 % in October and closed at 1.6 % in December (Figure 1). Infl...     » Weiterlesen


Quarterly Macroeconomic Outlook: Risks shift to the downside yet fundamentals rema...

14 Jän

Martin Ertl

The global economic outlook remains constructive, though, with deteriorating expectations.Short-term cyclical risks are titled to the downside in the Euro Area, yet, the fundamental factors underpinning the economic expansion remain in place.Following a strong economic expansion in Austria, a pleasant slowdown is underway. Solid labor market conditions keep supporting consumer sentiment and private consumption. In CEE there are no signs of an abrupt growth slowdown. Economic growth has remained surprisingly resilient. Nevertheless, growth will slow down gradually over the medium-term. The global expansion has passed its peak. The global economy is projected to grow at 3.5 % in 2019 and 2020 after 3.7 % in 2018 (OECD Economic Outlook No 104 – November 2018). Projections of global GDP growth for 2019 h...     » Weiterlesen


Slowing growth – the dilemma of the ECB (Martin Ertl)

17 Dez

Martin Ertl

Exit from QE has been confirmed, reinvestment of accumulated stock continues to provide accommodative monetary conditions.The December macro projections include downward revisions in GDP growth and inflation. Redemptions will be reinvested past the first increase in key interest rates. New ECB capital keys requires portfolio reallocation.In the meeting of the governing council (GC) last Thursday, the ECB confirmed its exit from ultra-loose monetary policy or quantitative easing (QE). Net asset purchases under the asset purchase program (APP) will end by December. The accumulated stock of assets will, however, be reinvested, in full, for an extended period of time and past the date when the GC starts raising key interest rates. This was not unexpected as the US Federal Reserve has only started to reduce its...     » Weiterlesen

Martin Ertl

Chief Economist, UNIQA Capital Markets GmbH

>> http://uniqagroup.com/gruppe/