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"Vigilance" with an American accent?

| Posted by: Paul Donovan | Tags: Paul Donovan

  • Back when the ECB was run by Trichet, the word "vigilance" was a signal that the ECB had decided to tighten, but not just yet. The US Federal Reserve minutes yesterday seemed to bring back echoes of that – the Fed wants to tighten, but not just now.
  • Both the Fed and the Bank of England were signalling relatively benign tightening cycles – slower, shallower than in the past. On our forecast both will maintain negative real rates in 2016 as the increase in inflation potentially outpaces the increase in interest rates.
  • US export and import prices are the rather unexciting highlight of the data calendar – they should show the effects of dollar strength (in weakening export prices, as US companies translate enfeebled overseas revenues into a stronger dollar, and relatively static non-commodity import prices).
  • The IMF continues its meetings. IMF forecasts are not worth any special reverence by investors, but the comments of proper policy makers on the fringes of the meetings are always worth looking out for.