More than one direction
- The Fed's Beige Book leaves policy options pretty wide open. The general tone was of better bank lending (though this was not universal) and an OK labour market. Bank lending, of course, matters to quantitative policy options as it is a driver of money velocity.
- This week's Prime Minister of Italy said he was reviewing the planned VAT increase this summer, along with property taxes, and looking at alternatives. This might be of some importance as the Council of Europe prepares to meet in the coming weeks, and austerity versus growth is a topic (again).
- Newswires report that the ESM will have a limit imposed on how much money can be used to recapitalise banks, when (if) the ECB gets regulatory authority and the ESM becomes a broader bail out fund. In other words the ECB's lender of last resort role may not be an entirely credible lender of last resort role.
- Neither the Bank of England not the ECB are expected to do anything with regard to monetary policy today. General market perceptions - the Fed inching towards tightening, the BoE staying steady, the ECB at the limits of what it can do and the BoJ beyond those limits - have only been confirmed by recent data.
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