ECB Lagarde: Strategy work will start in January – digital currency piloting

The President of the European Central Bank, Mrs Christine Lagarde said that the ECB will start its strategy work in January 2020. According to her, the central bank will engage with different stakeholders like the Members of the EU Parliament, civil societies, academics and investors in order to deliver its mandate in Europe.

– The Central bank´s strategy will include all the major changes the economy is facing like the big technology change, climate change and inequality issues, she said in the press conference in Frankfurt on Thursday.

She did not close much details of the framework as such, while it is still under consideration in the Governing Council. The new strategy will be ready during the next year´s time. The EU´s Climate Change package “the Green Deal” will be part of the work as the digital currency and the digital payment system as well.

According to Lagarde, she is in favour of the digital currency and digital payment as she mentioned that it would be good that “the ECB would be ahead of the tech curve”.

The Central Bank has formed a Taskforce for the digital currency and according to her there are several piloting projects “here and there” in order to get better understanding of the possibilities the new currency could provide. The piloting is expected to be ready by the mid 2020.

The new ECB President also emphasised the independence of the Central Bank. – Independence is important, she said and urged the fiscal policy makers to take the full advantage of the monetary policy in their decision making processes. – It takes monetary policy, fiscal policy and structural changes, in order to make the ballet of the economy, she referred.

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ECB left the rates unchanged

The European Central Bank, ECB decided today that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.50% respectively.

-The Governing Council expects the key ECB interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2% within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics, ESB said in its press release.

The net purchases restarted in November under the Governing Council’s asset purchase programme (APP) at a monthly pace of €20 billion.

-The Governing Council expects them to run for as long as necessary to reinforce the accommodative impact of its policy rates, and to end shortly before it starts raising the key ECB interest rates, the central bank said.


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US stocks up – Uber & Lyft gained

The US stocks gained modestly in New York on Wednesday trading. The Fed, central bank left the key rates unchanged and expects that there is no need to change the rates during next year. The inflation is estimated to increase next year and would reach the inflation 2 % target in 2021.

Dow Jones closed up 0,11% to 27911,09 points, S&P 500 -index closed up 0,29% to 3141,62 points and tech-focused Nasdaq up 0,44 % to 8654,05 points. Tech and materials were the leaders of the trading day.

The ride-hailing companies Uber (UBER) and Lyft (Lyft) gained on Wednesday due to the positive report from Barclays. According to the estimate, Barclays estimates that both companies are well positioned to turn profit. Uber closed up 1,86 % to 28,42 dollars and Lyft closed up 4,64 % to 47,36 dollars.

Tesla (TSLA) closed up 1,11 % to 352,70 dollars, Ford up 0,44 % to 9,11 dollars and Apple (AAPL) up 0,85 % to 270,77 dollars.

The Fed also published its economic outlook, which estimates moderate growth for the next year and the unemployment rate is expected to stay at 3,5 %.

The big question of the US China trade deal is still open. The 15th December trade tariffs deadline is on Sunday and according to some media information, there have been talks to delay the deadline.

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Powell: Monetary policy is not the tool to volatility – rates unchanged

The Chairman of the Federal Reserve Jerome Powell said in the press conference today, that the monetary policy is not the right tool to tackle market volatility.  He commented the overall market volatility and the US China trade tensions, which have caused the global growth stagnation. The Federal Reserve have been in the repo-markets adding liquidity several times during this quarter.

Mr Powell also said that the central bank did not expect this kind of slowing global growth in the beginning of this year. – We did not expect this kind of slow growth for this 2019 year, he said today.

The Federal Reserve Open Market Committee FOMC decided the leave the rates unchanged. The federal funds rates range is between 1,5 % and 1,75 %. Mr Powell also mentioned that the central bank is interested to monitor changes in the repo-market operations in the future.












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Fed: Economic outlook remains favourable- inflation target unchanged (updated)

The US Federal Reserve, Fed said today, that the US economic outlook has remained favourable. Inflation is expected to rise to 1,9 % next year and to 2,0 % in 2021.  The central banks inflation target is unchanged.

According to the Fed, the central banks monetary policy is well positioned and the policy will support growth and jobs.

The Fed left the federal funds rates unchanged as the markets expected. The fed funds range is 1,5%  – 1,75 %.

According to the central banks economy outlook, the median GDP for next year is 2,0 % and 1,9 % for 2021. The unemployment rate is expected to be 3,5% next year and 3,6 % in 2021.

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EU presented the Green Deal – climate-neutral continent (updated)

The European Commission presented today the “Green Deal” proposal for the climate-neutral continent in the world.  According to the Commission, becoming the world’s first climate-neutral continent by 2050 is the greatest challenge and opportunity of our times.

According to the Deal, it should “enable European citizens and businesses to benefit from sustainable green transition. Measures accompanied with an initial roadmap of key policies range from ambitiously cutting emissions, to investing in cutting-edge research and innovation, to preserving Europe’s natural environment.”

The European Green Deal covers all industry sectors, for example transport, energy, agriculture, buildings, and industries such as steel, cement, ICT, textiles and chemicals.

The EU Commission will also present the first European Climate Law and Biodiversity Strategy for 2030, the new industrial Strategy and Circular Economy Action Plan. The aim is also to make the Farm to For Strategy for sustainable food and pollution-free Europe.

All these actions require major investment and therefore the EU is also presenting a Green Financing Strategy next year.

-Achieving the current 2030 climate and energy targets is estimated to require €260 billion of additional annual investment, representing about 1.5% of 2018 GDP. This investment will need the mobilisation of the public and private sectors. The Commission will present in early 2020 a Sustainable Europe Investment Plan to help meet investment needs, the release says.

-At least 25% of the EU’s long-term budget should be dedicated to climate action, and the European Investment Bank, Europe’s climate bank, will provide further support. For the private sector to contribute to financing the green transition, the Commission will present a Green Financing Strategy in 2020, the EU said on Wednesday.




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