The ECB it is expected from its first meeting in the outcome of British post-voting period. An event which, as we have said several times, he immediately moved back down the budget of risks to the macroeconomic outlook Eurozone . Although all analysts now agree that the impact on the euro growth both content – however difficult to estimate – The ECB can only take note of the actual major downside risks for growth , highlighting the strength of communications on their monetary policy accommodating . It is unlikely, however, we believe that the Council can opt for substantial changes of monetary stimulus already in this meeting (as they are not excluded for technical adjustments to APP parameters).
economic growth slowing . Therefore, the first acknowledgment can only be linked to the evidence that Eurozone growth is set to slow down . This growth, however, had already lost momentum in the spring months, even before the Brexit a reality. The composite PMI and the European Commission’s index of confidence have recovered in average compared to the winter months, but they are descended from the peak. The indications exports in May continued to be bleak, with impressions that were then confirmed by subsequent statistical data. Certainly not exciting news also in terms of retail sales slowed in May, even though – as is easily seen, not in all sectors (eg, new car registrations continue not to keep still).
How much will the Brexit . Not everything is, however, already interpreted in a negative measure. The appointment of Theresa May as the British Prime Minister and Conservative Party leader, for example, took place faster than planned (originally, it was thought that all it could unlock only in autumn). The effect was that, at least on this front has been resolved the political impasse across the Channel, but was left open uncertainty about the way in which the negotiations will be conducted towards the exit. It seems certain, in this regard, that the process will not however prevent the fulfillment of negative consequences for the UK both in the short and medium term. However, it is still very difficult to assess the size of the slowdown that will emerge, especially now that the process will be led by a Prime Minister who said they prefer a slow and cautious approach to the issue by the EU output. With regard to the – hard – estimates of what will happen in the optical GDP, you will suffer the worst consequences and the UK, with losses in the worst-case scenario could be up to 0.5% of GDP per annum , against a decline of growth estimates of euro area GDP, which is between 0.1% and 0.3% for the next two years. Very arduous, about, thinking that might arise Brexit real recession in the euro area.
ECB, decisions difficult time . Another thing finally seems to be certain: Brexit shows the balance of risks for growth and inflation euro area down again and complicated – and not just – the ECB’s decisions. The minutes of the June meeting indicated a rather broad consensus that the recovery was consolidating and that the downside risks to the scenario had been partly reduced compared to March, thanks to the monetary policy measures. Already at that time the Monetary Institute was still assumed an attitude of “ watchful waiting “, which was aimed mostly understand more reliable measure which were the effects of the measures announced in December 2015 and March 2016, and only partially initiated, and then check the result of the referendum on Brexit .
in the very short term, in the week of the meeting, we do not expect revolutions or in attitudes to us by the ECB nor the acknowledgment of the new scenario (which will presumably be updated at the September meeting). By the July meeting, in fact, the ECB will have available many updated data (only the ZEW survey) and is therefore much more likely that the monetary institution’s decisions are dictated more by the performance of financial conditions.
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