ECB may ease pressure on Central-Eastern central banks

2018 ◽  
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Eastern Europe ◽  
Central Banks ◽  
Fuel Price ◽  
Content Type ◽  
Central Eastern Europe ◽  
Central Eastern ◽  
European Monetary Policy ◽  
The Impact

Subject The impact of ECB and US Fed policy on monetary policy in Central-Eastern Europe. Significance The pressure on central banks in Central-Eastern Europe (CEE) to tighten monetary policy is easing slightly. The ECB offset its decision to terminate its quantitative easing (QE) programme in December with a pledge to refrain from raising interest rates until the second half of 2019. However, there is domestic pressure for tighter policy in some of the CEE region. This is most pronounced in Romania, where the National Bank (NBR) has already raised interest rates three times this year to counter a surge in inflation. Impacts The increasing divergence between US and European monetary policy is likely to push the euro down against the dollar. The dramatic escalation in tensions over global trade will keep German investor confidence at around its lowest level since 2012. OPEC and Russian attempts to reverse supply curbs and fears over the fallout from a full-blown trade war will curb further fuel price gains.

ECB may spark rate rises in Central-Eastern Europe

2017 ◽  
Keyword(s):  
Interest Rates ◽  
Eastern Europe ◽  
Emerging Market ◽  
Commodity Prices ◽  
Content Type ◽  
Market Sentiment ◽  
Central Eastern Europe ◽  
The Us ◽  
Equity Funds ◽  
Central Eastern

Significance Inflation rates are rising sharply across Central-Eastern Europe (CEE), mainly thanks to a recovery in commodity prices. A flurry of stronger-than-expected economic data is fuelling speculation in financial markets about the timing of increases in interest rates across the CEE region. Forward markets are already pricing in rate hikes in Romania and Poland within the next twelve months. Impacts Traders are now expecting the US Federal Reserve to achieve its goal of hiking interest rates three times this year. Emerging-market bond and equity funds are enjoying a surge in inflows, market sentiment having improved sharply after the US election. Mounting uncertainty regarding France’s presidential election next month is having a negligible impact on euro-area government bond markets.

Ultra-loose monetary policy will soon run its course

2016 ◽  
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Financial Markets ◽  
Interest Rates ◽  
Mutual Funds ◽  
Investor Sentiment ◽  
Central Banks ◽  
Target Range ◽  
Content Type ◽  
Equity Mutual Funds

Significance Expectations that the Fed will refrain from hiking its benchmark rates from its target range of 0.25-0.5% and that the Japanese central bank will provide further stimulus are suppressing volatility in financial markets and fuelling demand for risk assets. However, evidence that "overburdened" monetary policy is losing its efficacy triggered a sell-off in bonds and equities on September 9, increasing the scope for sharper price falls as investors worry that central banks have run out of ammunition. Impacts Services expanded in August at their slowest pace since 2010, making it less likely that the Fed will raise interest rates this month. EM bond and equity mutual funds have enjoyed a surge in inflows since the Brexit vote as yield-hungry investors pour money into risk assets Oil, a key determinant of investor sentiment, will stay below 50 dollars/barrel unless major producers agree measures to stabilise prices.

Prospects for Central-Eastern Europe in 2017

2016 ◽  
Keyword(s):  
Eastern Europe ◽  
Global Market ◽  
Content Type ◽  
Central Eastern Europe ◽  
Trading Partners ◽  
South Eastern Europe ◽  
Business Confidence ◽  
Central Eastern ◽  
The Baltic ◽  
The Eu

Subject Prospects for Central-Eastern Europe in 2017. Significance In the absence of robust business confidence, Central Europe and the Baltic states (CEB) will implement short-term monetary and fiscal policies to support growth; GDP growth will suffer from global market vicissitudes and rising political tensions in key trading partners inside and outside the EU. The crisis in the EU will continue to bear down on South-Eastern Europe (SEE), bringing an effective end to the policy of enlargement.

Another rating upgrade is likely for Hungary soon

2016 ◽  
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Banking Sector ◽  
Credit Rating ◽  
Emerging Market ◽  
Investor Sentiment ◽  
Central Banks ◽  
The Philippines ◽  
Content Type ◽  
Investment Grade

Significance Hungary thereby regains investment-grade status, albeit at the lowest level, from being downgraded to 'junk' because of doubts about the government's policies and the high public debt burden. Hungary's improving creditworthiness, underpinned by its current account surplus and deleveraging in the banking sector, contrasts with the increasing strain on Poland's credit rating. Political risk has become a major driver of investor sentiment towards emerging markets. Impacts Emerging market assets have become more vulnerable as investors reprice US monetary policy. Futures markets are now assigning a 51% probability to another rise in US interest rates at or before the Federal Reserve's July meeting. Central Europe's government bond markets are being supported by the persistently dovish monetary policy stance of its central banks. This contrasts with Latin America, where inflationary pressures are forcing many central banks to raise rates. Brazil, Turkey, Poland and the Philippines are among several countries where political uncertainty is a key determinant of asset prices.

Japan will stay the course on monetary easing

2018 ◽  
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Central Banks ◽  
Quantitative Easing ◽  
Content Type ◽  
Bank Of Japan ◽  
Target Date ◽  
Low Levels ◽  
Global Economic Growth ◽  
First Time

Subject Monetary policy in Japan. Significance The monetary policy board of the Bank of Japan (BoJ) at its last meeting abandoned its prediction of when the nation will reach its 2% inflation target, the first time it has omitted a target date since Governor Haruhiko Kuroda introduced his policy of radical monetary easing five years ago. Impacts Japan’s interest rates will remain at historically low levels for at least two more years. The yen will remain relatively weak as other countries’ central banks end their quantitative easing programmes. A weak currency plus widespread global economic growth will create strong demand for Japanese exports.

Fed move boosts tight Latin American monetary policy

2015 ◽  
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Latin American ◽  
Commodity Prices ◽  
Content Type ◽  
The Us ◽  
Capital Outflows ◽  
Government Bond Markets ◽  
The Impact ◽  
First Time

Subject The impact of US monetary policy tightening. Significance Following the US Federal Reserve's (Fed) historic decision to raise rates for the first time since 2006, the start of the Fed's monetary tightening cycle is accentuating the hawkish stance of Latin America's main central banks. This comes amid a dramatic sell-off in commodity markets, persistent concerns about China's economy and a severe deterioration in economic conditions across the region. Impacts EM asset prices have remained relatively resilient to the rise in US interest rates, in stark contrast to the 'taper tantrum' in 2013. Hitherto-resilient regional local currency government bond markets will face foreign capital outflows due to falling commodity prices. The Brazilian real is 2015's worst-performing major EM currency, but due largely to political and economic difficulties at home.

Minority strains in Eastern Europe threaten EU unity

2017 ◽  
Keyword(s):  
Eastern Europe ◽  
Identity Politics ◽  
National Minority ◽  
Content Type ◽  
Social Instability ◽  
Central Eastern Europe ◽  
Policy Success ◽  
National Minorities ◽  
Interstate Conflicts ◽  
Central Eastern

Subject Central-Eastern Europe's ethnic and national minorities. Significance Ethnic and national minority rights in Central-Eastern Europe (CEE) were once prominent in European discourse; today's silence hardly indicates policy success. They have been swept under the carpet by nationalist forces coming together to form a new, illiberal 'pole'. Exclusionary nationalism challenges largely symbolic minority protection regimes and encourages prejudice, fuelling social instability and threatening severe intra- and interstate conflicts. Impacts EU cohesion will be further undermined as neighbours brawl over national minorities. For lack of a coherent and legitimate EU approach, the integration of recent arrivals will pose a serious challenge. Russia's use of ethnic Russians and CEE's exclusionary identity politics will continue in a mutually reinforcing cycle.

Central-Eastern Europe will compete for new LNG market

2018 ◽  
Keyword(s):  
Natural Gas ◽  
Eastern Europe ◽  
Liquefied Natural Gas ◽  
Content Type ◽  
Natural Gas Market ◽  
Eu Member States ◽  
Central Eastern Europe ◽  
The North ◽  
Central Eastern ◽  
Gas Market

Subject LNG in Greece, Croatia and Poland. Significance Liquefied natural gas (LNG) terminals and interconnectors are part of the north-south natural gas corridor advocated by EU member states in Central-Eastern Europe (CEE) as a means to reduce dependence on Russia. Impacts The LNG project in Greece could slow down Croatia's plans to build an LNG terminal off the island of Krk. Access to cheap US gas via LNG is transforming the natural gas market worldwide. Cheaper gas may facilitate the transition from coal and increase the share of renewables across the region.

Migrant-averse Central-Eastern Europe will lose growth

2018 ◽  
Keyword(s):  
Eastern Europe ◽  
Western Europe ◽  
Lower Cost ◽  
Population Ageing ◽  
Content Type ◽  
Central Eastern Europe ◽  
Labour Costs ◽  
Working Age ◽  
Producer Prices ◽  
Central Eastern

Subject Looming demographic decline in Central-Eastern Europe. Significance The populations of Central-Eastern Europe (CEE) are declining because of emigration and low birth rates, the region’s population being set to fall until 2050 by an average of 0.5% a year. With the working-age population falling even faster, the demographic crisis raises questions about the region’s growth model, which has relied heavily on integrating its pool of lower-cost labour into European supply chains. Impacts Internal imbalances will worsen, with less economically successful regions disproportionately affected, some facing severe depopulation. Population ageing could exacerbate CEE’s turn towards populism, particularly as its pensioners are often among the less well-off. Rising CEE labour costs will push up producer prices in Western Europe, many of whose manufacturers rely on CEE production or suppliers.

Fiscal policy may deter holding Romanian debt

2017 ◽  
Keyword(s):  
Interest Rates ◽  
Sovereign Debt ◽  
Emerging Market ◽  
Central Banks ◽  
Bond Markets ◽  
Social Democrat ◽  
Content Type ◽  
East European ◽  
Central Eastern Europe ◽  
National Bank

Subject The outlook for Central-East European debt. Significance A flurry of hawkish commentary from the world’s leading central banks, in particular the ECB, which is preparing the ground for a withdrawal of monetary stimulus, has put significant strain on the domestic bond markets of Central-Eastern Europe (CEE). Under particular pressure are Romanian domestic bonds, because of the threat of fiscal slippages under the new Social Democrat (PSD)-led government, which are likely to force the National Bank of Romania (NBR) to hike interest rates more aggressively than its regional peers. Impacts Despite the central-bank-driven sell-off in global markets, negative-yielding bonds still account for one-fifth of global sovereign debt. Persistent concerns about a supply glut are keeping Brent crude below 50 dollars per barrel, with oil prices down by 14% since end-May. Emerging Market stocks are declining under pressure of hawkish rhetoric from central banks, but not Hungarian and Czech equities.

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