By Syndicated Content
May 10, 2021 | 12:18 AM
PARIS (Reuters) – The road to recovery from the coronavirus pandemic will be long with the unemployment rate in the euro zone not returning to its 2019 level before 2023, ECB Chief Economist Philip Lane told French newspaper Le Monde in an interview.
He also said the euro zone’s gross domestic product (GDP) will not return its 2019 level before spring next year.
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Charli McKenzie
Euro zone bond yields edge back up, inflation expectations rise
Most euro zone bond yields edged up on Monday as investors returned their focus to a brighter economic outlook and its implications for central bank policy following large swings following Friday’s U.S. non-farm payrolls data.
Rising crude oil prices after a major cyberattack forced the shutdown of critical fuel supply pipelines in the United States meanwhile fueled euro zone inflation expectations.
A key market gauge of long-term inflation expectations in the bloc rose to around 1.56% its highest in almost four weeks.
Germany’s 10-year Bund yield touched its highest level in almost a week, while Italian borrowing costs held near their highest levels since September.
Raising pace of bond buys not off the table for ECB: Lane
The European Central Bank could still increase bond purchases at its June meeting if such a move is needed to keep borrowing conditions favourable, ECB Chief Economist Philip Lane told a French newspaper.
He also said unemployment is not expected to return to its pre-pandemic level before 2023, a long process that will require a “sustained effort” from both the ECB and governments.
“We can increase or decrease our purchases depending on what is necessary to keep financing conditions favourable,” Le Monde quoted Lane as saying on Monday. “Our overall commitment is to maintain favourable financing conditions.”
5/5/2021 9:29:32 AM GMT
Some good data in the US may cast further doubt on the ability of the Fed to stick to its ultra-dovish stance and give some support to the dollar, especially against the low-yielders. EUR/USD may move below 1.2000, but evidence of vaccination speeding up in the eurozone bodes well for a EUR rally in the longer run. In Brazil, a 75bp rate hike is widely expected.
USD: Good data may offer some short-term support
The dollar enjoyed a small corrective rally yesterday, amid a generalised risk-off sentiment in global markets that was exacerbated by Treasury Secretary Janet Yellen suggesting that interest rate increases may have to rise to prevent overheating in the economy. Yellen clarified that she was not endorsing or suggesting monetary tightening, and indeed rate expectations hardly moved – not a surprise considering the Fed reiterated its cautious rhetoric only last week – which is why the dollar’s reaction was relatively contained and almost entirely
4/23/2021 7:25:23 AM GMT | By FXStreet Insights Team
The European Central Bank (ECB) made no new policy announcements or changes in forward guidance at the April Governing Council meeting. There were, however, five interesting points from the press conference, Aline Schuiling, Sr. Economist at ABN Amro, reports.
Taper talk dismissed as premature
“No taper – ECB President Lagarde made it clear that the Governing Council had not discussed the phasing out of net purchases under the PEPP at the meeting as it was ‘premature’. This was in response to a question pointing out that a number of hawkish national central bank heads had recently signalled that they would be in favour of tapering purchases in the second half of the year. Her comments suggest that this is not a majority view in the Council.”