Browsing all articles tagged with Bundesbank

German Economy to Pick up Although Fall Short of Traditional Pace

Germany’s economy will recuperate from a bout of winter weakness however fall well short of the dynamic growth rates of previous years as euro zone recession and global slowdown stunt investment and exports.

There are homegrown problems too. What hue of government will result from September elections is injecting doubts and foreign investors cite worries regarding over-regulation and Germany’s future energy mix after Chancellor Angela Merkel turned her back on nuclear power.

Europe’s paymaster was long flexible to the euro debt crisis but contracted at the end of previous year and only eked out meager growth in the first quarter.

The Bundesbank stated this week a solid second quarter recovery was in prospect. Construction is expected to bounce back following a harsh winter and private consumption will grow thanks to low unemployment inflation-busting wage boost and low interest rates.

Although even the government forecasts just 0.5 percent growth in 2013 and economists doubt German companies will start investing heavily in the short term.

Christoph Schmidt, head of the German Council of Economic Experts, nobody expects strong growth for this year now particularly as the first quarter was so sobering, advisors to the government known as the wise men.

The economy grew just 0.1 percent in the first quarter following shrinking 0.7 percent in the previous three months of 2012.

Schmidt said trade will not contribute much, it could even drag on growth so that leaves domestic demand, private consumption is comparatively stable however investments are restrained and the key question will be when and how much they pick up.


ECB poised to cut rates to help recession-hit euro zone

The European Central Bank is closer to inferior interest rates than at any time since it previous cut them in July 2012 and is likely to shave a quarter point off at its policy meeting coming week.

Senior sources involved in the negotiations say momentum is building for action to assist a euro zone economy which has fall back into recession, a move that some policymakers wanted to take earlier this year.

Inflation descending well below target gives the bank scope to act and a senior ECB official stated even Bundesbank chief Jens Weidmann, the most hawkish member of the 23 man Governing Council had an open mind.

Following the bank’s previous monetary policy meeting on April 4, ECB President Mario Draghi signaled that a cut could come soon when he stated that the bank stood ready to act to enhance the recession hit euro zone economy.

The ECB’s Governing Council meets in Bratislava coming Thursday one of two annual policy conferences outside Frankfurt. The 23 man body infrequently moves rates when it meets off base; however the bleak economic picture strengthens the case for action.

Any decision on whether to act in May will depend on the economic statistics. Benoit Coeure, a dovish member of the ECB’s core group of policymakers said on Monday the bank had not seen statistics pick up since its last rate decision.

The ECB expects a steady recovery in the euro zone in the second half of this year, subject to downside risks. Facts indicating the economy’s performance will be weaker than that scenario would strengthen the case for a rate cut.

Policymakers think a rate cut would have limited impact on the economy however would at slightest show they are supporting it. A decision to cut could well not be generally supported.

That marked the fourth time the German Composite PMI has dropped below 50, into contractionary territory since September 2008. On the preceding three occasions, an ECB rate cut has followed immediately following publication of the final data or the month after.


Precious Metal Holds Close To Two Week High On Euro Zone Concerns

Precious Gold traded at a little changed rate on Wednesday, holding close to a two week high strike in the last session when Germany’s central bank articulated concerns regarding the euro zone crisis and the risk of the European Central Bank’s shift to stem the crisis.

Germany’s Bundes bank stated the euro zone crisis, which has relieved as a result of European Central Bank’s funding promises was not over, and it had set aside gold more euros against what it consider risky ECB moves.

Italy’s borrowing costs will rise on Wednesday at its initial sale of long term debt since Fitch cut its credit rating, however demand for European Central Bank and high yields protection will temper the augmentation.

Spot gold floats at $1,592.19 per ounce at 0031 GMT,moderation from $1,598.2 per ounce in the previous session. US gold traded almost flat at $1,591.50 per ounce.

Gene Arensberg the editor of the Got Gold Report stated that if the funds are influenced yellow metal’s improvement is done, that means they have a much out sized short position this time to cover. That is high octane buying stress.

He further said that smaller and locals traders will want to front run the specs too, accumulating to the aggression of the short covering rally. That could sourced quite a surge in the futures price for precious metal’s short term, and it’s how the bullion pullback previous year ended.

Gold future for April delivery climbed $13.70 per ounce or 0.9% to settle at $1,591.70 per ounce on the Comex division of the New York Mercantile Exchange.


European Central Bank Rate Cut Probable Following Serious Argue

ECB officials said on Friday that the bank had a very serious debate regarding cutting interest rates this week and that a cut was probable coming year if the euro zone economy does not pick up.

The Austrian and German central banks independently suggested such a pick up is doubtful, predicting slight growth in their economies in 2013.

The ECB kept interest rates same on Thursday, however Governing Council members held a wide discussion regarding cutting interest rates from their existing record low of 0.75 percent.

The Bundesbank suppose Germany’s economy to develop just 0.4 percent coming year, losing from a June prediction of 1.6 percent. The new projection is marked by a high level of doubts, it added, and the balance of risks is on the problem.

The downward modification come a day following the ECB lowered its estimates for next year, pointing to weaker growth outlooks for the euro bloc’s core countries such as Germany, Netherlands and the France.

Austria’s central bank cut its 2013 growth predict for the country’s export dependent economy to 0.5 percent from the 1.7 percent it had probable in June, because of the global downturn, less investment and slow consumer spending.

Makuch, who is also the governor of Slovakia’s central bank, if the circumstances does not recover, and there is comparatively a small chance there will be a major development, it is possible to anticipate a shift in interest rates next year.

The Bundesbank stated that given the complex economic situation in some euro zone countries and widespread doubts, economic growth will be lower than formerly assumed.

The German central bank added that the repeated attitude for the German economy has soften. Enterprises are reducing their investment and hiring less new staff.

Economists anticipated that the German economy to contract in the fourth quarter however to get better as soon as in the first quarter.


Bundesbank Swipes At Draghi as European Liability Lines Became Deeper

The Bundesbank resist to the ECB plan to facilitate sick financial institutions is its current swipe at the debt crisis combating efforts of Mario Draghi’s central bank.

As Spanish banks scramble for guarantee to exercise in the refinancing operations that are mainstreaming them afloat, ECB stated it will cut the rating doorstep and modify eligibility requirements for some asset backed securities. Although the shift will give worried banks superior access to ECB liquidity, it will also augment the amount of risk on the central bank’s balance sheet.

The criticism point out one of the error lines dividing European officials as they resist ending a crisis threatening to split the currency union apart. As Draghi’s officials scramble to place policies that will fight the current stage of the disorder, German policy makers are highlights the risk of pursuing unorthodox policies that potentially place taxpayers on the hook for potential losses.

Holger Schmieding, chief economist at Berenberg Bank in London said that it’s about the usual game, the ECB has to do something to ease a liquidity crisis and the Bundesbank is not very happy regarding it. The Bundesbank being significant does not completely counteract what the ECB is doing, however perhaps makes it a little less effective.

Looser collateral is the most recent concern to divide Europeans days previous to a meeting that Italian Prime Minister Mario Monti stated that must succeed or risk a bond market sell-off. German policy makers are unwilling to place too much on the line to help debt strapped nations previous to they secure their budgets and banks. Italian and French leaders are pushing for a broader range of crisis fighting tools.

Those arguments have effected on the ECB’s Governing Council also. Two years ago, the German central bank appear and opposed the ECB’s extraordinary decision to buy the bonds of upset nations as part of a broader push to trample out a crisis that was opening to spread from Greece. As the German central bank eventually went along with the plan, it has since been mostly deemed and shelve ineffective by most ECB officials.