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Growth games

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  • Euro Bundesbank president Weidmann conceded that there might possibly be a deflation threat in the Euro area. This concession would seem to make a farce the pretence that the ECB waiting for economic forecasts revisions before deciding to ease. They have decided to ease.
  • With policy predetermined the Euro area data is not that pertinent in the near term. Nevertheless we do not see a deflation threat in the details of the CPI numbers, though the GDP print probably does not bode well for nominal growth expectations.
  • Japan's Q1 GDP was stronger than expected at 1.5% qoq, with around 1% of that due to consumer frantically rushing to buy ahead of the consumption tax increase. The question has always been about the sustainability of that in Q2.
  • Fed Chair Yellen is speaking to a small business forum; pertinent because small businesses suffered more than most in the downturn, they are the most important part of the US economy, and their recovery is likely to be strongly influential in determining the pace of policy tightening.

Listen to the audio version of this briefing.