Eurozone Struggling ( will Labour still back single market membership desire before Election ?? ) Or U Turn

[life on mars]

https://www.theguardian.com/global/2...od-post-brexit

Pound well up on Euro so best time to by

From FT Today : The European Central Bank has raised interest rates by 0.75 percentage points to their highest level since 2009, pledging to continue increasing borrowing costs in the coming months to tackle record eurozone inflation despite a looming recession in the region.

The increase, announced after the ECB governing council met in Frankfurt on Thursday, was in line with market expectations. But bond markets rallied and the euro fell as investors detected signs that the central bank was increasingly worried about a downturn and may stop raising rates earlier than expected.

After growing political criticism of the ECB’s sharp tightening of monetary policy in recent weeks, its president Christine Lagarde made clear on Thursday that rate-setters would not bow to such pressure, saying “we have to do what we have to do” to tackle inflation, which is now five times their 2 per cent goal.

Italy’s new prime minister Giorgia Meloni said this week that tighter monetary policy was “considered by many to be a rash choice”. Meloni’s remarks came a week after France’s president Emmanuel Macron warned he was worried about central banks “smashing demand” to tackle inflation, now at a record high of 9.9 per cent.

Lagarde, however, added that the ECB was not “oblivious” to the possibility of a recession and the impact this would have on the poorest people. The ECB forecast last month that the eurozone would avoid a contraction in output, but its president acknowledged this scenario was now “looming much more on the horizon”.

The ECB changed its guidance from saying last month that rates would rise “at the next several meetings” to only say that it “expects to raise rates further” having already made “substantial progress in withdrawing monetary policy accommodation”.

Investors viewed the ECB’s remarks on the heightened risk of a recession in the currency area as a signal that rates would not rise as high as previously thought. Carsten Brzeski, head of macro research at Dutch bank ING, said Lagarde’s emphasis on the risk of recession “opened the door to a dovish pivot”.

Eurozone bonds rallied strongly and the euro slipped as market prices implied the deposit rate — now at 1.5 per cent following Thursday’s decision — would only rise to about 2.5 per cent by September next year, more than a quarter of a percentage point lower than previously thought.

The euro fell 0.9 per cent against the dollar to trade at $0.9988 late afternoon London time. German 10-year yields fell to 1.95 per cent, 0.24 percentage points lower than their level ahead of the interest rate announcement. Riskier eurozone government debt rallied even more sharply.

Lagarde said the scale and pace of further rate rises would depend on the outlook for inflation and take into account the typical delay before the impact from previous rate increases on inflation was revealed. “We have acknowledged that more rate rises are in the pipeline, but to which level I cannot tell you,” she said in a press conference following the decision.

The council also decided to make a €2.1tn scheme of ultra-cheap loans less attractive to encourage commercial banks to repay early. The move is the first step towards shrinking the ECB’s €8.8tn balance sheet and is expected to be followed by a reduction in the amount of maturing bonds it replaces in part of its €5tn asset portfolio from next year.

The central bank said the terms of the loans — known as targeted longer-term refinancing operations — would be changed from November 23 to raise the average interest rate banks pay on them by bringing it in line with its deposit rate from that point. It added that banks would be offered extra opportunities to repay the loans early starting next month.

Frederik Ducrozet, head of macroeconomic research at Pictet Wealth Management, said changing the terms retroactively was “a risky decision” and that it would “likely” incentivise banks to repay the funds borrowed earlier. Some banks have warned retroactive changes will damage the credibility of the ECB’s refinancing operations and constrain its ability to use them in future.

[Eric Cartman]

There is absolutely zero chance of labour backing single market membership in their next manifesto.

Europe is weaker from us leaving, we are weaker from us leaving. Brexit was always a lose lose.

[Dave Blue]

It won’t but it should. The Northern Irish are doing well from it.