Monetary conditions are deteriorating in the euro area
Head of Macro Analysis
Credit Impulse in the euro area is slightly negative. Due to the very high correlation with final domestic demand (R^2 0.86), we can expect growth to slow down significantly in the next nine to 12 months.
In addition, a simple model of MCI (Monetary Conditions index) based on variables reflecting interest rates, money growth, exchange rates and unconventional measures, confirms that monetary conditions are deteriorating. The impact will likely be more important in PIIGS than in core countries. It is not alarming yet but it is certainly something that the governing council of the European Central Bank will monitor closely in the coming months. From my viewpoint, the next ECB president (German or not) will have no other choice than to think about easing monetary policy rather than tightening.
Quarterly Outlook Q2 2022
Quarterly Outlook Q2 2022: The End Game has arrived
- Shocks from covid and the war in Ukraine have forced the global financial and political world to change, but what will the end game be?
Productivity and innovation have never been more importantAs the world economy hits physical limits and central banks tighten their belts, could equities be facing a 10-15% downside?
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.