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Tightening by omission?

| Posted by: Paul Donovan | Tags: Paul Donovan

  • The ECB's Draghi speaks this evening, although as it is a social event comments on policy would not perhaps be appropriate. Not that inappropriate timing has appeared to weigh on the ECB president hitherto.
  • The Reserve Bank of Australia did nothing on monetary policy – which means that they have allowed the regulatory tightening of central bank policy to stand for now. We do not see this tightening as appropriate in economic terms, and expect an offsetting rate cut next year.
  • The US senior loan officers' survey showed a slowing in credit easing to consumers. This is not a tightening, just a slower pace of easing – and of course banks cannot ease indefinitely (otherwise they end up throwing used bank notes at passers-by).
  • Our global outlook (published yesterday) is not assuming a great deal of change in the oil price in 2016. However, reactions to any oil price change appear asymmetric. A rising oil price has more impact on consumer inflation expectations, and falling oil price has more impact on growth.