Tuesday 27 September 2016

All eyes focused on fraught debate over world woes

Sarah White

Published 04/04/2016 | 02:30

At the end of a tough quarter, the fraught debate over how policymakers should tackle the world's economic woes gets another airing in the coming week as central banks on both sides of the Atlantic publish minutes. Photo: Getty (stock image)
At the end of a tough quarter, the fraught debate over how policymakers should tackle the world's economic woes gets another airing in the coming week as central banks on both sides of the Atlantic publish minutes. Photo: Getty (stock image)

At the end of a tough quarter, the fraught debate over how policymakers should tackle the world's economic woes gets another airing in the coming week as central banks on both sides of the Atlantic publish minutes.

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In Ireland it is quiet on the earnings front, but a busy week for economic data ranging from Exchequer returns on Monday to car sales figures on Friday.

Elsewhere, solid growth in US employment and an unexpected manufacturing uptick in China last month will have provided some comfort on Friday, but headwinds (Japan's factory sector disappointed last month and euro zone inflation was anaemic) invariably lurk nearby.

Federal Reserve minutes, released on Wednesday and coming after chair Janet Yellen set a dovish tone, are likely to provide fodder for those expecting it to remain cautious, though speeches from six more Fed officials, including two rate-setters with hawkish reputations, could shift the tone.

Closer to home, Central Bank watchers are likely to zone in on the European Central Bank's margin for manoeuvre after it unveiled further stimulus in March with deeper rate cuts and a boost to monthly asset buys.

A detailed account of the ECB's last meeting, due on Thursday, will set investors digging for clues over its willingness to go further after president Mario Draghi's suggestion that interest rates had hit the bottom. Central Bank of Ireland minutes are also out this week.

The ECB's chief economist and several executive board members are scheduled to appear at events across Europe in the coming days, and their comments will be monitored closely.

In the US, Janet Yellen is due to take part in a discussion with former Fed chair Ben Bernanke on Thursday.

For now it will be up to other central banks - among them Australia's, Poland's and India's - to consider policy changes, with rate decisions scheduled for the coming days.

The first two are expected to keep rates steady at record lows, while India is seen cutting them at its policy review tomorrow as inflation falls.

In China, an update on foreign exchange reserves, expected on Thursday, should show a moderation in the declines noted in recent months when the central bank stepped up efforts to prop up the yuan and dump the dollar to stem capital outflows.

China has receded from many investors' focus in the past six weeks, helped by the recovery in oil prices.

But the world's second-biggest economy retains the capacity to surprise.

Irish Independent

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