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What more will the European Central Bank do to help the eurozone economy?


What more will the European Central Bank do to help the eurozone economy?

As ECB policymakers meet on Thursday, they will be painfully realizing that the eurozone economy is still constrained by shutdowns to address rising coronavirus infections in as the US, China and UK are reopening and recovering faster.

Christine Lagarde, ECB president, compared the euro zone last week with a patient who walks out of an intensive care unit with the help of two crutches.

But with the euro zone lagging behind its main trading partners, the key question for the ECB is whether it will do enough.

At the previous monetary policy meeting in March, ECB decided to buy bonds “at a significantly higher speedUnder a 1.85 billion euros emergency purchase program (PEPP) to avoid unexpected tightening financial conditions.

Since then, adjusted for the Easter holiday season, they have bought 19 billion euros of bonds per week, compared with a weekly average of 15 billion euros earlier this year, according to Goldman Sachs.

Some economists believe that the ECB could rise further, especially as Italy’s 10-year yield rose 0.13 percentage points over the past month.

However, Andrew Kenningham, chief European economist at Capital Economics, points out that Italy’s yields rise despite the ECB’s higher bond purchases. “[The ECB’s] He said the revealed preference was to buy around € 15 billion- € 20 billion per week under the PEPP and let the bond price adjust to market conditions. Martin Arnold

How will pandemic winners and losers rate US earnings?

In another busy week of U.S. corporate earnings, Netflix will be in the spotlight as investors wait to see whether one of the companies benefits the most from the thirst for entertainment at Will consumers’ homes in the pandemic continue to attract viewers this year despite loosening restrictions on locking.

The streaming team, which will announce its first quarter earnings on Tuesday, added 8.5 million paying customers over the three months to the end of December even as they raised prices – beating home forecasts. analyzing 6 million and bringing up their total number of subscribers nearly 204 million people registered.

Netflix is ​​expected to gain 6.2 million subscribers last quarter, according to analyst surveys Refinitiv, down from a 15.8 million year-on-year increase before shutdowns across the US.

However, analysts warn that last year’s increase in subscribers will impact 2021 demand for live streaming groups.

This week will also update information from US airlines, with investors analyzing results from United, American, Southwest and Spirit for signs of recovery in travel demand.

The number of visitors passing through U.S. airport security checkpoints is still below 2019 levels but already climb steadily in recent weeks to the level that was last seen before the coronavirus stopped working early last year.

American Airlines said it is expected to report first-quarter net losses amounting to $ 1.3 billion. But they forecast strong demand this summer, saying they will fly 90% more domestic seat capacity than in 2019. Matthew Rocco

Is UK inflation at the inflection point?

The investors have focused on inflationary this year as the main driver of the financial market. In the UK, annual consumer price growth fell to 0.4% in February from 0.7% in the previous month. The March report, released on Wednesday, could mark a point as price growth shifts to an upward trajectory.

The key question for investors is where inflation will stop and how central banks will react. Price growth beyond the Bank of England’s 2% target in the long term could force the Bank of England to tighten monetary policy to cool down the economy.

Economists predict UK March CPI will rise to 0.8%, according to a Bloomberg survey.

Analysts also predict that the index will continue to rise in the coming months, potentially exceeding BoE’s target by the end of the year. However, that does not mean that the central bank will take the opportunity.

Paul Dales, UK chief economist at Capital Economics, said: “I think the bank will ignore a lot of inflation over the next year or two.

Dales said BoE is likely to ignore higher growth figures due to the strong impact of technical factors, including rising utility and energy prices. The clothing has also proven to be a “wild card” in recent months, he added, as retailers have increased price tags in response to door lock measures.

But the higher indexes over the next few months could still leave investors worried about the prospect of higher inflation persisting. “The current inflation outlook is more uncertain than it was 10 years ago,” Dales said. Joshua Oliver

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