ECB Considers When to Join the Dovish Camp: Global Economy Week
(Bloomberg) -- The European Central Bank enters the week under pressure to join counterparts elsewhere in taking an easier approach to monetary policy as economic growth slows.
While euro-area policy makers convene in Frankfurt on Thursday, economists reckon they will hold off in providing fresh support in the form of fresh long-term loans to banks. An announcement is instead viewed as more likely to happen in April, allowing officials more time to potentially tweak the tool.
The ECB currently pledges to keep borrowing costs on hold at least through the summer and as long as needed, but about a third of those surveyed predict it will alter its guidance to signal a later lift-off. Economists at Bloomberg Economics don’t expect such a tweak this week although they say the central bank will downgrade is outlook for growth.
“A weaker economic outlook makes adjustments to the Governing Council’s guidance on interest rates inevitable,’’ said Jamie Murray, chief European economist at Bloomberg Economics. “But with policymakers expressing comfort with market pricing, there’s little urgency. Instead, we expect a change in June, alongside an announcement on liquidity measures.”
Elsewhere, China’s National People’s Congress convenes while the U.S. Labor Department on Friday releases new payrolls data. Here’s our weekly outlook of key events.
Here’s our weekly rundown of other key economic events.
The U.S. employment report may show hiring moderated in February after a red-hot month of job gains in January. Nonfarm payrolls probably increased by 185,000, after 304,000 reading for the prior month that was the best in almost a year, while the jobless rate fell to 3.9 percent, according the medians in a Bloomberg survey. While the labor market has remained strong through a late-2018 slowdown in growth, there are signs that trade-war uncertainty and government shutdown are hurting hiring intentions although hopes are mounting that the fight with China is cooling. The Federal Reserve will publish its Beige Book on economic conditions and Fed policy makers including Jerome Powell, John Williams and Loretta Mester are scheduled to speak.
For more, read Bloomberg Economics’ full Weekahead for the U.S.
Europe, Middle East and Africa
As well as the ECB meeting on Thursday, investors will get insights into the euro-area economy from purchasing managers indexes on Tuesday and the final snapshots of gross domestic product from around the region throughout the week. Friday witnesses factory data from Germany, France and Italy. Bank of England Governor Mark Carney will be testifying before the House of Lords on Tuesday as the clock runs down to Brexit. Turkey’s central bank holds its interest rate-setting meeting on Wednesday, two days after the statistics institute is expected to report inflation moderating to just under 20 percent. The decision will be the last before local elections on March 31 usher in a four-year period without a scheduled election, unprecedented since President Recep Tayyip Erdogan came to power in 2003.
For more, read Bloomberg Economics’ full Weekahead for EMEA
China’s National People’s Congress will dominate the newsflow from Asia, with the annual goal for economic expansion and budget plans among the flood of news. Economists are looking for a growth target of around 6 percent, down from about 6.5 percent for 2018, and will be scrutinizing speeches for Beijing’s policy priorities to see which way the pendulum is swinging -- supporting expansion or curtailing risks.
“The growth target for 2019 and signals on fiscal and monetary policy will shed some light on how the government aims to steer an economy buffeted by a trade war and past efforts to rein in leverage,” said Chang Shu, chief Asia economist at Bloomberg Economics.
Elsewhere, Australia’s long interest-rate hold is set to continue as RBA Governor Philip Lowe balances strong employment versus falling home prices. The nation’s gross domestic product is set to have moderated to an annual pace of 2.7 percent in the fourth quarter. Malaysia also meets to set interest rates, with no change expected. Japan will release its latest take on gross domestic product in the final quarter of last year.
For more, read Bloomberg Economics’ full Weekahead for Asia
The Bank of Canada is expected to remain on hold when it sets interest rates on Wednesday, while Peru’s central bank is also likely to maintain rates. In Argentina, the central bank releases its monthly survey of market expectations, with Bloomberg Economics predicting a further upward revisions to inflation forecasts for 2019. Inflation data for Mexico, Colombia and Chile are also due.
For more, read Bloomberg Economics’ full Weekahead for Latin America
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