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The FOMC maintained its current monetary policy settings today, in line with market expectations. Neither the 0.25% to 0.50% Fed funds target range nor the Fed's current portfolio reinvestment policies were changed. The discussion in the March FOMC minutes and subsequent comments from Fed officials pointed to little chance of policy move in April.
The housing market bounced back in 2015. The number of home transactions reached around a million units, up by 15% over 12 months. Will this momentum persist in 2016? The recent rebound is cyclical and driven by two factors: the marked drop in lending rates and new-build stimulus plans. But the market has still not been really "cleaned up" as prices remain high. The economic environment, for its part, is mixed, so the recent recovery is fragile.
The ECB released the details about the CSPP. However, it will "be mindful of the potential impact of its purchases on market liquidity". We expect the ECB to purchase EUR4bn a month on average. Mario Draghi gave more details on other monetary policy tools. Above all, M. Draghi has fiercely defended the ECB's independence and reiterated the crucial need for governments to do more on structural reforms and growth-friendly composition of public finances.
On 13 April, the French government presented its 2016-2019 "Stability Programme". The objective of a deficit of less than 3% of GDP should, therefore, be reached in 2017. Public debt, which stood at 95.7% of GDP in 2015, is forecast to continue rising, but only modestly, to 96.5% in 2017, before easing down back from 2018. These figures are based on fairly cautious growth assumptions
In a highly uncertain environment, French growth is likely to be resilient, but a bit sluggish. After annual growth of 1.2% in 2015, we are forecasting 1.2% in 2016 and 1.4% in 2017, below the forecast eurozone average.
Jean de La Bruyère starts The Characters, his collection of philosophical essays. 320 years later, we face the same issue with helicopter money: everything has already been said about this potentially powerful central-bank tool. In this report, we do not claim to revolutionise the subject only to clear the air about the next potential monetary policy tool. We try to answer four basic questions: where does the 'helicopter money' idea come from? What are the different options conceivable? Is helicopter money legal for the ECB? To what extent is helicopter money effective?
The 50% fall in oil revenues highlighted the vulnerabilities of the Saudi Kingdom. The growth model based on the oil rent is no longer viable given the forecasts of chronically low oil prices, and the economic policy decisions that will be made in the coming years will be decisive for Saudi Arabia. Among the Gulf countries, Saudi Arabia is probably the country that is faced with the greatest challenges for transformation of both its economic model and its social structures.
Edition April, 2016
France: Existing housing sales and prices
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