There are rumours that the ECB is pressing for a faster repayment of TLTROs by banks, apparently over reputational concerns. TLTROs could be becoming burdensome also for their potential inconsistency with the current monetary policy stance. However, any intervention will have to be cautious and circumscribed, given the risk of sparking tensions on the markets, and should be implemented only the new anti-fragmentation mechanism is in […]

Between 2022 and 2023 we will see a slowdown in world economic growth and the retreat of inflation rates, partly of their own accord and partly linked to the more restrictive direction of economic policies and financial conditions. The uncertainty of the scenario is very high, and suggests it is not possible to rule out a global recession between 2023 and 2024, which may […]

The ECB has released the flexibility on PEPP reinvestments to contain the divergence of financial  conditions among euro area countries. In addition, it envisaged the implementation of a  structural solution: probably an SMP-type mechanism, with access conditional on the fulfilment  of minimum conditions and sterilisation of liquidity effects. This development should facilitate the  normalisation of official rates in the coming months. The FOMC comes […]

On 12 and 19 June, legislative elections will be held in France to assign the 577 seats of the National Assembly. The key theme is whether the newly elected president will be able to govern with a parliamentary majority in his favour, or if he will have to negotiate the contents and the subsequent approval of each […]

United States – The economic outlook for 2022 remains positive, but the war on inflation will cause injuries on the macro battlefield starting in 2023. US growth remains solid despite the Fed’s hawkish signals and market turbulence. As always, the adjustment of economic variables, both real and nominal, will take time. In the next few quarters, final domestic demand should continue […]

The ECB is leaning towards an initial rate hike already on 21 July, bringing forward to early July the termination of net purchases under the APP. Policy rates will turn positive again by the end of the year, as long as the economy does not implode for some reason. Any potential signals of financial “fragmentation”, on the […]

FOMC meeting: acceleration in the pace of monetary stimulus removal, but the Fed is still hoping in an “almost soft” landing. The Fed hiked rates by 50bps and announced its balance sheet reduction plan, which will be implemented starting at the beginning of June. The Committee envisages 50bps hikes at the next couple of meetings as well, but […]

The round of March confidence surveys in the Eurozone displayed the initial effects of the international geopolitical crisis, especially on consumers and industrial firms; the impact on the European cycle may last well beyond a few weeks. In the meantime, inflation hit a new high in March since the records began, at 7.5%. On this front, national Governments have intervened […]

The European Central Bank accelerated the progress on the path of policy normalization, despite the uncertainty caused by the Russian invasion of Ukraine. Initial assessments of the economic impact of the latter appear very mild, at least in the baseline forecasting scenario, although the balance of risks is clearly tilted to the downside for growth. The ECB is keeping […]