EU Economy - As the interest rate approaches its effective lower bound, there is the risk that longer-term inflation expectations may become unanchored ..- ECB

Publication - The ECB’s announcements of non-standard measures and longer-term inflation expectations  - By Peter Karadi[1]

Stable and well-anchored longer-term inflation expectations bolster the ability of the European Central Bank (ECB) to achieve its medium-term inflation objective. This article assesses the effectiveness of non-standard monetary policy measures in guiding longer-term inflation expectations in an environment where standard interest rate policy approaches the lower bound. 

Global Economy - The global crisis and the fall in some asset prices, have lead central banks in developed countries to take unprecedented measures ..

Publication - Volatility spillovers of Federal Reserve and ECB balance sheet expansions to emerging market economies - Working Paper  by Apostolos Apostolou, John Beirne

Non-technical summary 

The expansion of international trade and a more pronounced increase in cross-border capital flows over the past decade or so means that countries are more interconnected, with developing countries receiving and sending substantial amounts of capital.

EU Economy - Household consumption expenditure grew at a higher rate of 2.7% (after 2.1%) ..- ECB

NEWS Release Euro area households and non-financial corporations: 4th Quarter 2016

 ● Loans to households increased in the fourth quarter of 2016 at a higher rate of 2.1% (after 1.9% in the previous quarter). Household financial investment increased at a lower rate of 2.1% (after 2.3%). Household net worth increased at an unchanged rate of 4.2%. 

EU Economy - Decisions taken by the Governing Council of the ECB..-

NEWS Release - Decisions taken by the Governing Council of the ECB (in addition to decisions setting interest rates) March 2017 - External communication

ECB’s Annual Report 2016

On 22 March 2017 the Governing Council adopted the ECB’s Annual Report 2016, which will be presented to the European Parliament and made available on the ECB’s website in 23 official languages of the European Union on 10 April 2017. On that date it will also be presented to the Committee on Economic and Monetary Affairs of the European Parliament.

European Union - People vote for populists in order to protest, but not to reject the EU as such..- Peter Praet - ECB

Press Release - Interview with Peter Praet, Member of the Executive Board of the ECB, conducted by Sabine Seeger and published on 24 March 2017

Mr Praet, the European Union is celebrating its 60th anniversary on 25 March in Rome. After a brilliant start and major achievements, the Community is now in a crisis. Can it be overcome, do you think?

EU Economy - Participation improves competitiveness, which boosts exports and raises income ..- ECB

Publication - Benefits of global value chain participation

The impact of global value chain participation on current account balances – a global perspective 

Participating in global value chains may improve an economy’s competitiveness and thereby raise its current account balance. Specifically, an economy’s competitiveness may increase as a result of substituting imported for domestically produced intermediate goods. The increase in competitiveness boosts the economy’s exports and raises its income. 

EU Economy - In January 2017 the current account of the euro area recorded a surplus of €24.1 billion ..- ECB

Press Release - Euro area monthly balance of payments (January 2017) - 22 March 2017

In January 2017 the current account of the euro area recorded a surplus of €24.1 billion.[1] - In the financial account, combined direct and portfolio investment recorded net acquisitions of assets of €153 billion and net incurrences of liabilities of €120 billion.

EU Economy - Banks working in tense macroeconomic conditions should also explore international or historic benchmarks in order to define “reasonable” long-term NPL levels..- ECB

Publication - Guidance to banks on non-performing loans

                                

Introduction  Context of this guidance A number of banks in Member States across the Euro area are currently experiencing high levels of non-performing loans (NPLs), as shown in Figure 1. There is broad consensus on the view that high NPL levels ultimately have a negative impact on bank lending to the economy1 , as a result of the balance sheet, profitability, and capital constraints faced by banks with high NPL levels.

EU Economy - Competitiveness relates to the business environment and institutional framework that allow efficient firms to thrive, thus supporting trade performance and productivity. ..- ECB

Publication -  Two-way link between trade and productivity

Introduction - Owing to the increased availability of firm-level data, various empirical studies have documented the existence of a marked heterogeneity in performance across firms. Empirical literature based on granular data shows that firms are very different in terms of e.g. size, cost structure, profits and productivity, even within finely disaggregated sectors.1 

EU Economy - In its assessment, the European Commission identified six countries with excessive imbalances: Bulgaria, France, Croatia, Italy, Cyprus and Portugal..- ECB

Publication - Plans needed to address economic imbalances

The 2017 macroeconomic imbalance procedure and implementation of the 2016 country-specific recommendations

Young economists’ competition: now open -- The European Central Bank invites PhD students to participate in the Poster session of the ECB’s flagship Forum on Central Banking ..

NEWS Release - Young economists’ competition: now open - ECB Forum on Central Banking  26-28 June 2017, Sintra - Submission deadline: 24 March 2017

Every year the European Central Bank (ECB) invites PhD students to participate in the Poster session of the ECB’s flagship Forum on Central Banking, held in Sintra, Portugal. Selected students are given the unique opportunity to present their research findings to policymakers and top academics from around the world and engage with them during the Forum.

EU Economy - There is much we can still do to reverse the aggregate productivity slowdown and dispel pessimism about our future.- Mario Draghi - ECB

Press Release - Moving to the Frontier: Promoting the Diffusion of Innovation -  Welcome address by Mario Draghi, President of the ECB,  at the joint conference by the ECB and the MIT Lab for Innovation Science and Policy “Fostering Innovation and Entrepreneurship in the Euro area”,  Frankfurt am Main, 13 March 2017

European Households - Nominal disposable income p.c. increased by 1.6% in 2016 Q3 after 2.2% in the previous quarter - From the low in 2013 this is equivalent to a gain in annual income of 690 EUR at current prices - ECB

Publication - HOUSEHOLD SECTOR REPORT 2016 Q3

Real household disposable income per capita (p.c.) continued increasing in 2016 Q3 for a ninth consecutive quarter, growing by 1.2% compared to 2.1% in 2016 Q2. Real disposable income has accumulated a recovery of 3.6% since reaching a low in 2013 Q2. This is equivalent to a gain in annual income of 690 EUR at current prices.

EU Economy - Over the projection horizon, real GDP is expected to grow by 1.8% in 2017, by 1.7% in 2018 and by 1.6% in 2019 ..- ECB

Publication - March 2017 ECB staff macroeconomic projections for the euro area

 The economic recovery in the euro area is projected to firm further, at a pace slightly above previous expectations. The expected global recovery and resilient domestic demand, supported by the very accommodative monetary policy stance, past progress made in deleveraging across sectors and a continued improvement in the labour market are projected to sustain the recovery over the projection horizon. 

EU Economy - Euro area real GDP increased by 0.4%, quarter on quarter - Headline inflation has again increased, largely on account of rising energy and food price inflation. However, underlying inflation pressures continue to remain subdued . - Mario Draghi - ECB

Press Relese - Introductory statement to the press conference (with Q&A) - Mario Draghi, President of the ECB, Vítor Constâncio, Vice-President of the ECB, - Frankfurt am Main, 9 March 2017

Ladies and gentlemen, the Vice-President and I are very pleased to welcome you to our press conference. We will now report on the outcome of today’s meeting of the Governing Council.

EU Economy - The Governing Council of the ECB decided that the interest rates will remain unchanged at 0.00%, 0.25% and -0.40% respectively ..-

Press Release - Monetary policy decisions  - 9 March 2017

At today’s meeting the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively. The Governing Council continues to expect the key ECB interest rates to remain at present or lower levels for an extended period of time, and well past the horizon of the net asset purchases.

EU Economy - The ECB buys a range of assets including government bonds, securities issued by European supranational institutions, corporate bonds, asset-backed securities and covered bonds at a pace of €80 billion per month..- From April 2017 they will amount to €60 billion on average.. - ECB

NEWS Release - Asset purchase programmes

Expanded asset purchase programme

The expanded asset purchase programme (APP) includes all purchase programmes under which private sector securities and public sector securities are purchased to address the risks of a too prolonged period of low inflation.

Official negotiations on Brexit have not even started, and they will take years to conclude - Meanwhile, a cloud of uncertainty is now hanging over everyone, including the banks. - ECB

NEWS Release - The European banking sector – growing together and growing apart  - Speech by Sabine Lautenschläger, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB, at the LSE German Symposium, London, 2 March 2017

Two major events provide the frame for my speech today. Both of them took place in June – one in 2012, the other in 2016. One of them took place in Brussels, the other here in the United Kingdom. One of them made Europe grow together; the other made Europe grow apart.

EU Economy - The composite cost-of-borrowing indicator for new loans to households for house purchase remained broadly unchanged at 1.81% in January 2017. . - ECB

Press Release - Euro area bank interest rate statistics: January 2017

Euro area bank interest rate statistics: January 2017  The composite cost-of-borrowing indicator for new loans to corporations1 remained broadly unchanged at 1.80% in January 2017.  The composite cost-of-borrowing indicator for new loans to households for house purchase remained broadly unchanged at 1.81% in January 2017. 

EU Economy - In the third quarter of 2016, insurers held total assets of €7,878 billion and pension funds €2,446 billion ..- ECB

Press Release - New statistics on euro area insurance corporations and pensions funds

  New statistics on insurance corporations and pension funds   Each sector now shown separately

  In the third quarter of 2016, insurers held total assets of €7,878 billion and pension funds €2,446 billion