ECB meeting in Vienna. Eyes on inflation forecasts – The Republic

MILAN – The ECB meets in Vienna to mark the two hundredth anniversary of the Austrian National Bank, and the markets look at the outcome of the meeting without expecting new measures to support the economy, after those launched in late 2015 and early 2016. No decline in interest rates, thus, or further expansion of the purchase of securities program, which now weighs 80 billion per month and also includes some companies. Mario Draghi could instead revise the inflation forecast after the rise in oil prices, and it is on this aspect that focus the observers’ expectations.

Inflation expectations. The predictions of the vigil gave widely for granted the continued levels of last rate defined in the meeting of 16 March, so that the attention is focused on other aspects of the Viennese central Bank meeting. Starting with the forecasts of inflation levels, that the Eurotower Economists had place in March to 0.1% for 2016, and 1.3% for 2017 and 1.6% for 2018. According to analysts, unlike what happened in the past there will be no downward revisions, but rather there may be a slight improvement of price expectations.

in a report to the eve of the meeting, the rating agency standard & amp; Poor’s has listed three factors that play in favor of a revision of inflation estimates, however modest and still far short of the levels close to 2% over the medium term which is carved in the mandate of the ECB. First, oil prices – with Brent that is just below $ 50 a barrel – are 30% higher than the last few assumptions Frankfurt. higher energy prices will have direct impact, especially in the next year, the main eurozone inflation, although in April it was still found to be negative with a -0.2% per annum. Then there are more clues that lead us to believe in an increase in interest rates by the Federal Reserve, probably in the July meeting; the markets are waiting for him, and it is no coincidence that since the end of April, the euro has weakened by 3% against the dollar. A single currency would lower the higher the cost to buy assets in dollars, with the effect of back inflation. Finally, we must consider the economy of the Eurozone recovery that have direct effect on the price level.

Bloomberg The chart indicates the prospects of inflation in five years for the next five, a dear parameter to Mario Draghi evaluating improvements to the goal of price closer to +2%

the theme Greece is well represented on the board of the central bankers. The Eurogroup of May 25, asked small corrections to Alexis Tsipras government to release a tranche of aid by 7.5 billion, which would allow Athens to repay the ECB to 2.3 billion bond maturing on July 20. Just this step would allow all’Eurotower to reopen a credit channel for Greek banks, which could come back to finance with normal monetary policy operations of the ECB in derogation from the rules that exclude countries with poor ratings. For the past fifteen months, in fact, the Hellenic institutions obtain their supplies through the Ela program, Emergency Liquidity Assistance, which, however, has far greater costs.

Topics:

bce

Greece

inflation

EUR

interest rates

ECB rates

Starring:

mario dragons