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Japan’s central bank is not expected to change settings at its policy review this week, but the debut of a dovish new deputy could widen a rift between advocates of continued stimulus and those wary of the rising costs of prolonged easing.
Few analysts expect the Bank of Japan’s new deputy governor, Masazumi Wakatabe, to rock the boat by proposing ramping up stimulus at the two-day rate review that ends on Friday.
But his presence would add clout to a group of board members who believe the BOJ should do more to accelerate inflation, or at the very least maintain stimulus for as long as possible.
That could widen a split with others in the board who see little room to ramp up stimulus, and fret about the rising cost of easing such as the hit to bank profits from near-zero rates. (Reuters – Continue Reading)
European Central Bank policy makers brushed off concerns over recent weakness in economic data, including inflation, saying they’re increasingly optimistic about reaching their goal.
“Confidence has recently risen and convergence is being confirmed -- partly because the temporary decline in the inflation rate has been weaker than our internal calculations had predicted,” Executive Board member Yves Mersch said on the website of Eurofi, which is convening a meeting of financial regulators. “More resilience will follow eventually. Still, patience and persistence with respect to our monetary policy is required.”
His colleague on the Governing Council, Lithuania’s Vitas Vasiliauskas, said on the website his confidence has increased that it’s time to phase out the ECB’s bond-buying program.
The comments coincide with the start of an ECB monetary-policy meeting in Frankfurt, where officials are set to discuss how and when to communicate the next stage in their gradual exit from extraordinary stimulus. They’ll get the chance to assess a spate of data that has shown output and sentiment in the currency bloc faltering, just as the global economy faces the risk of a U.S.-led trade conflict. (Bloomberg – Continue Reading)
Top executives in Germany have once again said they are less optimistic about their business environment and prospects, according to the results of a monthly poll taken by Germany’s Ifo economics institute. The euro slipped against the dollar on the news.
The Ifo April business climate index fell for the fifth straight month, dropping to 102.1 versus the economists’ forecast of 102.8 and March’s 103.2 reading. The indicator hit a record high of 105.1 in November.
The current conditions indicator—which set a record of 108.0 in January—dropped to 105.7, missing the estimate of 106.0 and last month’s reading of 106.5. It was the third straight decline for the indicator.
The expectations indicator for the next half year turned in its fifth consecutive decline. It shrank to 98.7 versus the estimate of 99.5 and March’s 100.1 reading after peaking at 103.9 in November. (LiveSquawk – Continue Reading)
Economists say the results of the April Ifo monthly survey will show a decrease in optimism among German business leaders, and the economic indicators will for the first time include the German service sector when they are released Tuesday at 0800 GMT.
Ifo said that starting this month, it will include responses from service company leaders in the survey results as the sector is now Germany’s largest. The institute added that beginning with the April data, it will update the base year to 2015 from 2005.
Economists said they expect the business climate indicator to fall to 102.8 from March’s 103.2 reading, which was adjusted down from 114.7 due to the change in the base year. According to the new methods of calculation, a decline in April would be the fifth straight for the headline indicator, which hit a record high of 105.1 in November. (LiveSquawk – Continue Reading)
Hedge funds investing in oil are luring capital at the fastest pace in more than a year.
With crude climbing to levels not seen since 2014, commodity funds have recovered the client outflows they suffered last year. And if firms such as Westbeck Capital Management and Commodities World Capital are correct about prices soon exceeding $80 a barrel from about $68 currently, then the jump in allocations may just the beginning.
Until Friday everything seemed to point to oil extending its gains, with confidence in the global economy building and geopolitical tensions and production shortages showing no signs of going away. Then U.S. President Donald Trump slammed OPEC on Twitter, saying prices are artificially high and will not be accepted. Prices slipped 19 cent a barrel. (Bloomberg – Continue Reading)
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