featured News Trending

ECB Should Brace for New Shocks, Including Russian Threats: Simkus

By 45 0

European Central Bank policymaker and Lithuanian central bank governor Gediminas Simkus said the ECB’s current policy stance is appropriate, with inflation at target and interest rates in a neutral zone, but warned that fresh shocks could disrupt this balance. Speaking to Reuters, Simkus highlighted persistent global uncertainty driven by geopolitical tensions, particularly the risk of Russian military aggression in eastern Europe, alongside trade frictions and other external pressures.

Simkus stressed that the ECB must ensure its systems are resilient to such risks, including safeguarding cash distribution and payment infrastructure in case of heightened security threats. He noted that countries bordering Russia face unique challenges, ranging from cyberattacks to airspace incursions, and argued that central banks must remain operationally prepared. He also added that banks need to be ready for longer-term risks such as climate change.

On monetary policy, Simkus said interest rates are firmly on hold at the ECB’s February meeting, as modest inflation fluctuations around 2% are normal. However, he cautioned against signalling future moves, saying the next rate change could equally be a hike or a cut. Emphasising flexibility, he said the ECB should avoid overreacting to short-term data swings and instead focus on broader economic trends, as shocks tend to affect growth before feeding into inflation.

Pic courtesy: google/ images are subject to copyright

featured News Trending

ECB Should Avoid Rushing Policy Moves Amid Uncertainty, Says Austria’s Kocher

By 58 0

The European Central Bank (ECB) should be careful about taking preemptive policy action in response to rising uncertainty, Austrian central bank chief Martin Kocher said in an interview with German outlet Platow. Kocher noted that while geopolitical risks have intensified recently, central banks should avoid committing to policy moves before risks clearly materialise.

Kocher pointed to heightened global uncertainty driven partly by fresh geopolitical tensions, including threats of new U.S. trade measures. However, he cautioned that acting too early—especially when inflation risks are not clearly tilted in one direction—could lock policymakers into a difficult position and complicate communication. “Some risks can be addressed in advance, but many cannot,” he said.

He added that over the past six months, risks had shifted “slightly to the positive,” with modestly improved euro zone growth expectations and stable financial markets. While acknowledging recent developments, Kocher said it was too soon to reassess the broader outlook. Financial markets currently expect the ECB to keep interest rates unchanged through 2026.

Pic courtesy: google/ images are subject to copyright

featured News Trending

Euro Zone Ends 2025 on Steadier Footing as Retail Sales and German Industry Improve

By 122 0

The euro zone economy showed fresh signs of resilience at the end of 2025, with retail sales outperforming expectations and German industrial activity picking up, according to data released on Friday. Retail sales across the bloc rose 0.2% in November, slightly above forecasts, while annual growth of 2.3% was driven by strong upward revisions to earlier data. Spain continued to outperform peers, while France also posted above-trend growth, even as Germany lagged behind the regional average.

Despite lingering global trade disruptions, the euro zone grew faster in 2025 than many economists had anticipated, suggesting households and businesses are adapting to economic shocks. Analysts noted that inflation hovering around 2% has created a favourable environment, aligning with the European Central Bank’s policy goals. While the ECB has already delivered multiple rate cuts to support growth, economists expect further easing to be limited as the recovery remains modest rather than robust.

Germany’s industrial sector offered cautious optimism, with output rising 0.8% month-on-month and industrial orders surging 5.6%, boosted by large contracts. Government plans to ramp up spending on defence, infrastructure and housing are expected to further lift confidence and growth into 2026. However, exports remain a weak spot, particularly shipments to the United States, which fell sharply after new tariffs were imposed, dragging German exports down by 2.5% in November and reducing the country’s trade surplus.

Pic courtesy: google/ images are subject to copyright

featured News Trending

Bulgaria Enters Euro Zone, Bids Farewell to the Lev

By 144 0

Bulgaria officially joined the euro zone on Thursday, marking a historic shift as the euro replaced the lev as the country’s currency from midnight. Celebrations took place across the capital Sofia, with euro coin projections lighting up the central bank’s facade and fireworks welcoming the milestone. Bulgaria becomes the 21st member of the euro area, increasing the number of Europeans using the common currency to over 350 million.

The move grants Bulgaria a seat on the European Central Bank’s Governing Council, allowing it to participate directly in euro zone monetary policy decisions. Successive governments have pursued euro adoption since Bulgaria joined the European Union in 2007. While public opinion remains divided, businesses have largely backed the transition, citing easier trade, travel and financial stability within the EU.

Many citizens expressed cautious optimism, saying the currency change would simplify travel and everyday transactions. However, concerns remain among some Bulgarians about potential price rises and broader political instability, following the government’s recent resignation amid protests over proposed tax hikes. Despite these worries, officials say euro adoption represents a major step toward deeper European integration.

Pic courtesy: google/ images are subject to copyright

featured News Trending

German Economic Recovery to Begin Slowly, Says Bundesbank

By 121 0

Germany’s economic recovery after three years of stagnation is expected to begin slowly next year before gaining momentum later, according to the Bundesbank’s latest biannual economic projections. Europe’s largest economy has struggled since 2023 due to a weakened industrial sector, subdued consumer spending and restrained government expenditure. A turnaround began this year after Chancellor Friedrich Merz eased spending rules and announced higher outlays on defence and infrastructure.

Bundesbank President Joachim Nagel said growth would remain modest at first but strengthen from the second quarter of 2026, supported by increased government spending and a revival in exports. The central bank now forecasts economic growth of 0.2% in 2025, an improvement from its earlier expectation of stagnation, while growth in 2026 is projected at 0.6%, slightly below its previous estimate.

Inflation projections, however, have been revised sharply higher due to faster-than-expected wage growth. The Bundesbank warned that strong wage increases, driven by low unemployment and labour shortages, could persist for years. Consumer price inflation is now expected to reach 2.2% in 2025, up from an earlier forecast of 1.5%, influencing the European Central Bank’s decision to raise its own euro zone inflation outlook and maintain a cautious policy stance.

Pic courtesy: google/ images are subject to copyright

featured News

ECB Pushes for Simpler Bank Rules While Keeping Capital Demands Intact

By 162 0

The European Central Bank has proposed major reforms to simplify the EU’s banking rulebook, aiming to streamline supervisory requirements without reducing overall capital burdens. The ECB argues that reducing complexity should not weaken financial resilience, despite industry pressure for lighter regulations as seen in the U.S. and UK. The plan centres on merging several capital buffers into two core layers—releasable and non-releasable—while keeping guidance requirements separate.

Banking groups broadly welcomed the effort but warned that the proposals fall short of delivering the regulatory relief needed to boost competitiveness. German banking associations said the changes do not go far enough, particularly for small lenders, and urged the European Commission to move more decisively. European bank stocks nonetheless gained over 1% following the ECB’s announcement, outpacing wider market performance.

Beyond capital buffers, the ECB also called for reforms to AT1 convertible bonds, questioning whether these instruments truly absorb losses, and recommended an overhaul of EU-wide bank stress testing to make the process more effective. The proposals, backed by the ECB’s Governing Council, must now be reviewed by the European Commission, meaning any concrete changes could take months or even years to implement.

Pic courtesy: google/ images are subject to copyright

News Trending

Eurozone cuts interest rate for first time in 5 years

By 556 0

The European Union has become the second major economy this week to reduce its lending rate, indicating progress in addressing inflation. The European Central Bank (ECB) cut its main interest rate from a record high of 4% to 3.75%, following Canada’s decision to lower its official rate on Wednesday. This decision coincides with EU-wide elections, reflecting public discontent over living costs.

ECB President Christine Lagarde stated that the inflation outlook has significantly improved, allowing for the rate cut. However, she cautioned that inflation would likely remain above the 2% target “well into next year,” averaging 2.5% in 2024 and 2.2% in 2025. Lagarde emphasized that the ECB would maintain a restrictive interest rate policy as needed to achieve the 2% target, without committing to a specific rate trajectory.

Lindsay James, investment strategist at Quilter Investors, noted that the rate cut was anticipated but still a relief for European consumers and businesses. She mentioned that the ECB’s move precedes potential cuts by the Bank of England and the US Federal Reserve, providing needed economic stimulus.

Despite a slight increase in inflation in May to 2.6% from 2.4% in April, the ECB decided to reduce rates. This follows Canada’s reduction from 5% to 4.75% after their inflation fell to 2.7%. Sweden and Switzerland have also made similar rate cuts.

Lagarde provided a positive economic outlook for the eurozone but warned of challenges such as geopolitical tensions and climate-related risks that could impact growth. Katherine Neiss, chief European economist at PGIM, expressed confidence in further ECB rate cuts over the summer or autumn, potentially lowering eurozone rates to 3.5% or less by year-end. She cited sluggish economic recovery, slowing inflation, and easing wage growth as justification for additional cuts.

In the UK, speculation exists that the Bank of England might reduce rates as early as this month, with inflation down to 2.3% from its peak over 11% in late 2022. The International Monetary Fund recommended cutting UK rates from 5.25% to 3.5% by year-end. However, George Godber from Polar Capital suggested that the upcoming UK election could complicate the Bank’s rate decision on June 20, as political considerations might influence the outcome.

The US Federal Reserve is also expected to reduce rates soon, with the current US inflation rate at 3.4%. Godber predicted that the Fed would act before the November election.

Picture Courtesy: Google/images are subject to copyright

News

ECB brings in new measures to boost Eurozone Economy

By 889 0

The European Central Bank has introduced certain dramatic measures to boost the economies of the countries in Eurozone.

The recession the world now faces is the biggest since the World War Two period.

This is not the first time the European Central Bank has introduced a program to boost the economies of the countries in the Eurozone region.

Earlier, it launched a similar policy, in response to the request of some badly affected countries in the southern region of the Europe such as Italy and Spain.

That means the latest policy is the second policy taken by the ECB to help the countries in the Eurozone to surmount the economic difficulties caused due to the Covid-19 outbreak.

According to the central bank, it will increase the size of its bond buying programme by €600bn to €1.35tn.

The programme will run until June 2021, which is actually six months longer than planned.

The move will keep borrowing costs low for countries and firms as they face huge budget deficits and recessions.


Photo Courtesy: Google/ images are subject to copyright

News

Germany criticises ECB’s mass bond-buying policy

By 931 0

A top court based in the European country of Germany has ruled that the mass bond-buying policy of the European Central Bank to stabilise the eurozone partly has violated the constitution of the country.

The ruling is not related to the purchase in the coronavirus crisis. It is actually connected to the government debt worth €2.1 trillion bought by the ECB since 2015.

According to the ruling of the Constitutional Court in Karlsruhe, there is not enough German political oversight in the purchases.

Italy is among the countries most reliant on ECB bond purchases because of the severe economic impact of the coronavirus pandemic.

Neither Germany nor any of the European countries have commended on this matter.


Photo Courtesy: Google/ images are subject to copyright