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Today Mario Draghi reaffirmed the ECB's strong commitment to asset purchases until the Governing Council sees "a sustained adjustment in the path of inflation". While the tone of the statement was marginally more positive ("risks have become more balanced"), the renewed focus on inflation "trends", ignoring one-offs and temporary deviations, suggest that the ECB will refrain from major policy changes for now.
The ECB's Bank Lending Survey for Q1 2015 was consistent with a further improvement in the Eurozone credit cycle, including a better transmission of monetary policy transmission to SMEs. The missing link to a sustainable recovery remains investment which contributed negatively to loan demand, with the exception of Spain. The ECB will need to see stronger hard data before it turns more confident about investment prospects.
We expect the ECB to show a steady hand in QE implementation at its regular policy meeting on Wednesday, playing down speculation regarding an early tapering of asset purchases. The Governing Council should also reaffirm that -0.20% is the “effective lower bound” for the deposit rate, as stated in the March accounts.
Highlights: In Poland, the outlook for 2015 is favourable. Caught between sabre rattling and debt negotiations, Ukraine is approaching a crucial period... In South Africa, the rand's depreciation is starting to play its role as a shock absorber for the external accounts. In China, real estate prices continue to fall. In Colombia, the oil price counter-shock is under control.
The recovery, which was restricted to the US and UK only a few months ago, is now definitely spreading to other countries. The growth upticks in the Eurozone and Japan differ from the cruising speed now achieved in the US. First off, they are far more modest. They are also more fragile, as they owe a great deal to the drop in oil prices. Another support factor, this time linked more to economic policies, is the relative strength of the US dollar.
This publication presents the economists' forecasts for interest rates, exchange rates and commodity prices, along with the Crédit Agricole Group's central economic projection.
What is at stake in the near-term for Greek authorities is to secure financial support to meet a tight repayment schedule which implies to step backwards on several campaign promises while maintaining its support home. But what is at stake for Greek people in the longer term is to find a lasting solution for the debt problem which does not stake a claim on future growth prospects.
Edition April 1, 2015
Brazil: balance of payments
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