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A week without lift-off

| Posted by: Paul Donovan | Tags: Paul Donovan

  • The latest round of the Greco-German crisis ended with no agreement, but then no one seriously expected an agreement. Friday's Riga meetings might have ended with slightly better behaviour than the petulance on display. However, EU officials have been keen to stress that a Greek exit is not going to happen.
  • International investor attention is likely to be diverted towards the US, where the Federal Reserve entertains us with a two day meeting. The media keeps using "lift off" to describe the tightening timing. This is a wholly inappropriate phrase. There will be nothing rocket-like about the trajectory of US rates.
  • First quarter GDP growth is due from the US and the UK. For the US the interest is in the extent of damage from the bad weather, and whether there is something more sinister in the slowdown. For the UK, as with most data points at the moment, the GDP will become a political football.
  • While the politics of the Euro area is sadly likely to dominate, there is the release of M3 money supply this week, and also German inflation. The former is of interest as a means of assessing the effectiveness of quantitative policy. German inflation has positively surprised every month this year so far.