The monetary policy in the United States and in the Euro area will be tightened in 2019, less strong, as recently adopted. Whether it comes in Europe to an interest rate step strongly depends on the development of the economy.
At the time of their last rate meeting in mid-December, the ECB had announced at least the end of the net bond purchases. However, the Central Bank will replace expiring bonds for an indefinite period of time. The program is so terminated, the volume of bonds the ECB holds, but it remains the same, so at 2.6 trillion euros.
“This is a first brake,” says Ulrich Kater, chief economist of Dekabank. “But when the ECB begins to raise interest rates, not fixed yet.” Carsten Brzeski, chief economist for Germany and Austria, the Dutch Bank ING, is still forecasting that the ECB President Mario Draghi will at least bring the Deposit rate still stands at minus 0.4 per cent, yet in his term to Zero. “For further increases in interest rates may have little room for manoeuvre”, he believes.
The voices, the one end of the German economic boom in advance, multiply and become louder
Cloudy Outlook
For a deterioration of economic activity in the important Eurozone Germany, the Ifo business climate index fell in December for the fourth Time in a row spoke to last.
In the United States, the American Central Bank, the Fed remains confident, but most likely it will be in 2019 only two interest rate steps depending on the economic cycle. Because Fed Chairman Jerome Powell, expected to be a less dynamic economic development.
On the search for an adequate room
If, however, the recession is coming faster than I thought, which means the Central banks have to counter it? The Fed has now created enough room to be able to the interest rates again lowering my observer. However, in the case of the ECB in doubt. Interest rate cuts would, in any case from a lower base, it is hardly possible.
Draghi had insured that there were enough instruments, but “bond purchases could lose in the longer term, effectiveness”, is afraid of Ulrich Kater. Jörg Krämer, chief economist of Commerzbank, expects at least a further strong flooding the financial markets with liquidity.
The legal backing to have the ECB as a since the decision of the European Gerichtshofsvor a few weeks, that these purchases are legal on the other hand, the Central Bank in 2019, will hang up well-to-longer-term refinancing operations in volume of 400 billion euros, which could replace the old ones – especially for the benefit of the banks in the southern countries of the Euro area, explains Krämer.
What bankers are shaking in the Central
The barriers to the industry are known: The forthcoming Brexit, trade conflicts, and the budgetary situation in Italy. Even if the budget dispute with the EU has been Commission just before Christmas, beige, happened but in a way that was a further nail in the coffin of the stability and growth Pact in the Euro area, criticized Ulrich Kater from Dekabank. So the rule will undermine the work of the Euro.
“This topic is more important than the question of who is following Mario Draghi in November,” he fears. If the stability of policy is not going to be respected in the Euro area in the policy, then even the most conservative of all the money politicians would have to pursue an unorthodox monetary policy, in order that the Euro area could continue to hold together.
In November 2019, his time as President of the European Central Bank for Mario Draghi.
Draghi want a stronger Union
He does now in 20 years: On 1. In January 1999, the Euro was introduced as book money, i.e. the banks and companies to put in your non-cash money circulation on the Euro. The citizens paid for three years and bar in their respective national currency, fixed rates with each other.
ECB President Draghi will keep the Euro, at least for a success: the trade within the European Union had increased in the last 20 years, from a share of 13 percent of the gross domestic product of the EU to 20 per cent. “But I am a very biased observer.” grinned he.
Not all of the members of the Euro area would equally share in the benefits of a common currency, Draghi. Is the sun part of the responsibility of individual member countries. Draghi’s answer: He is in favour of the monetary Union. However, the policy in Europe is struggling with a stronger Integration and, therefore, levy of additional sovereignty.