All posts tagged: Central banks

Eurozone growth limps on as Iran war fuels stagflation fears – POLITICO

Eurozone growth limps on as Iran war fuels stagflation fears – POLITICO

Published by Sam Flores

The number incorporated weaker than expected figures from France, where GDP was flat from the fourth quarter. But the region’s largest economy Germany performed better than feared, growing 0.3 percent, while growth in Italy and Spain slowed by less than forecast. The war — and the resulting surge in oil and gas prices — has sharply changed the economy’s trajectory. The German government has halved its growth forecast for this year to only 0.5 percent. The International Monetary Fund earlier this month downgraded its 2026 growth forecast for the eurozone to 1.1 percent, from a prior estimate of 1.3 percent. It warned that rising prices and weaker activity are pushing the region toward a more stagflationary environment. Inflation, by contrast, is on the way up, due to the surge in energy costs. The headline inflation rate jumped to 3.0 percent in April, Eurostat said in a separate release. Core inflation, which strips out volatile oil and food prices and is seen as a bellwether for underlying trends, eased to 2.1 percent from 2.2 previously, but …

German government slashes growth forecast amid Iran war fallout – POLITICO

German government slashes growth forecast amid Iran war fallout – POLITICO

Published by Sam Flores

Inflation to rebound Rising energy prices will likely push inflation back toward 3 percent this year and next, the government said — prompting financial markets to expect two European Central Bank rate hikes this year. ECB officials say they won’t overreact to what may be a short-lived blip, but have warned that they will raise rates if they see any signs of inflation taking root again, only four years after the last such shock. German Economy Minister Katherina Reiche — whose past employment at energy giant E.ON has made her a target for criticism from the left and environmentalists — was quick to blame factors beyond her control for the latest downgrade. “The recovery that we expected this year will once again be derailed by external geopolitical shocks,” Reiche told a press conference. “The war in Iran is driving energy and commodity prices through the roof. That is hurting households and raising costs for the German economy.” However, German business and independent economists have both accused the government of failing to do what is in …

War threatens to wreak havoc with the global economy, IMF warns – POLITICO

War threatens to wreak havoc with the global economy, IMF warns – POLITICO

Published by Sam Flores

The same factors could push global inflation above 6 percent next year, it cautioned. Finance ministers and central bank governors from around the world are set to talk about little else at the IMF-World Bank spring meetings this week in Washington, D.C., and the IMF’s numbers — like many from private-sector forecasters — make clear how serious the risks of a protracted major conflict are. Hoping against hope To be sure, the IMF’s baseline forecast still clings to the hope that things will return to normal by the middle of the year, leaving little more than a small dent in an economy that has performed more strongly over the last year than was widely feared when U.S. President Donald Trump launched his trade war against the rest of the world. Under this central case scenario, growth would be 3.1 percent this year, only 0.2 percentage points less than the IMF thought in January. In 2027, it would be 3.2 percent, unchanged from the January forecast. But under a severe scenario, with lengthy disruption to shipping …

UK’s Reeves ‘angry’ over Trump’s decision to attack Iran – POLITICO

UK’s Reeves ‘angry’ over Trump’s decision to attack Iran – POLITICO

Published by Sam Flores

After reaching their lowest point since Oct. 2024 before the invasion, yields on 10-year U.K. government bonds have now soared to their highest since the 2008 financial crisis.  Deutsche Bank has estimated that the increase has already stripped between £7 billion and £10 billion from the chancellor’s £23.6 billion fiscal headroom. “The costs of borrowing for government have gone through the roof,” Reeves noted in the interview. “This country hasn’t done anything to cause those prices to rise, but the decision of Donald Trump, the decision that Keir Starmer and this government did not want any part of and are trying to de-escalate, is causing real hardship for people now.” “I think that people can see that what Trump has done in the Middle East is going to cause economic challenges all around the world, with potentially higher inflation, weaker growth and weaker tax receipts,” she added. The Middle East war is the latest episode that has put Europe at odds with Trump’s America. Earlier Wednesday, Starmer said the “volatile” international situation requires Britain to …

Orbán’s rival accuses Kremlin of new smear blitz in Hungary election  – POLITICO

Orbán’s rival accuses Kremlin of new smear blitz in Hungary election  – POLITICO

Published by Sam Flores

The leading Fidesz lawmaker in the European Parliament, Tamás Deutsch, turned the tables and accused Tisza of spreading false information. “As part of this serious interference, the pro-Ukrainian and pro-Brussels Tisza party is spreading disinformation through sympathetic media outlets in Brussels and Hungary,” he told POLITICO. “Hungary and its government will not accept pressure or interference in its democratic processes and will do their utmost to stand up for the interests of the Hungarian people.” Forcing resignations Because the deadline to register candidates for the April 12 vote has passed, the names on the party lists can’t be changed. For this reason, analysts say, Fidesz may now try to dig up dirt on Tisza candidates in the 106 constituencies to knock them out of the race with no hope of replacement. “There are some people who have had certain issues in their lives in the past. Nothing criminal, but perhaps they had a company that had to be closed down, or they went through a divorce, or something similar. These things then can be used …

Why Vladimir Putin is the biggest winner from the war in Iran – POLITICO

Why Vladimir Putin is the biggest winner from the war in Iran – POLITICO

Published by Sam Flores

For Russia, the surge in oil prices amounts to an economic windfall at a crucial moment, as the cost of four years of war in Ukraine threatened to spill over into a domestic economic crisis. The assault on Iran may undermine Moscow’s claim to stand by its allies, but it is already benefiting Russia’s economy and, by extension, its war against Ukraine — leaving the Kremlin well placed to emerge as one of the main beneficiaries of the expanding conflict in the Middle East. Economic turnaround Only several weeks ago, the mood among Russia’s economic elite was grim. The Russian finance ministry’s budget plan for this year assumed a baseline benchmark of $59 per barrel of Urals crude, the country’s main export blend. But in January, energy revenues plunged to their lowest level since 2020, compounding a disappointing tax haul. As Western sanctions, high interest rates and labor shortages strained the economy, tension between the finance ministry and the central bank on how to mitigate the damage became increasingly visible. “It was far from a …

Christine Lagarde says she will see out her term as ECB chief – POLITICO

Christine Lagarde says she will see out her term as ECB chief – POLITICO

Published by Sam Flores

Christine Lagarde said her “baseline” is that she will stay at the European Central Bank until her term as president ends in October 2027. “I think that we have accomplished a lot, that I have accomplished a lot,” she said in an interview with The Wall Street Journal, published on Friday. “We need to consolidate and make sure that this is really solid and reliable. So my baseline is that it will take until the end of my term.” Her comments come two days after a report in the FT, sourced to a single person “familiar with her thinking,” suggested the opposite. The article triggered controversy, implying that the appointment of the next ECB president could be moved up to deny a possible far-right president in France any say in the matter. President Emmanuel Macron is due to step down in April next year. Source link

Farage deploys Jenrick to calm Britain’s bankers – POLITICO

Farage deploys Jenrick to calm Britain’s bankers – POLITICO

Published by Sam Flores

It’s an effort to reassure investors and businesses that Reform can be trusted with the British economy. It was only last month that his party leader, Nigel Farage, told the World Economic Forum in Davos he doesn’t like banks, would scrap interest payments lenders receive through the BoE’s quantitative easing program, and refused to rule out appointing his own governor to the central bank. Earlier this year Farage stated that he was giving “serious thought” to scrapping the OBR, which provides independent analysis of government spending plans. In November, Farage and his deputy Richard Tice U-turned on a plan to dish out £90 billion in tax cuts, which was initially pledged in the party’s 2024 election manifesto. Jenrick will vow Wednesday that Reform UK will be focused on “restoring stability” and “eliminating wasteful spending.” Although Jenrick will claim that the BoE would keep its independence under a Farage government, he will add that the Bank would be stripped of “ancillary responsibilities,” such as considering the impact of climate change, and will follow his leader in …

Bank of France chief’s surprise exit stokes suspicion among Macron’s opponents – POLITICO

Bank of France chief’s surprise exit stokes suspicion among Macron’s opponents – POLITICO

Published by Sam Flores

Villeroy explained that he had been approached to take over the presidency of the Fondation Apprentis d’Auteuil, a Catholic charity that helps young people from difficult social backgrounds to get into the job market. He said he had taken his decision “in complete personal independence” and added that there would be enough time between now and June to organize a smooth succession. An influential voice on the European Central Bank’s Governing Council, Villeroy is currently serving his second six-year term as governor. He has been at the head of France’s central bank for nearly 11 years and “has been a solid, well-respected governor,” according to Véron. Quick and fulsome praise Villeroy’s colleagues were quick to heap praise on the outgoing governor. “The [ECB’s]Governing Council has benefited enormously from the realism combined with strong European convictions and vision that he always brings to the table,” Lagarde said in a statement, paying tribute to his “friendly, wide-ranging, team-oriented, good-humored and consistently well-articulated contributions.” “His deep engagement with the European cause, tied to his sincere love for France …