Frankfurt letter, week beginning March 21

-   European Central Bank

The European Central Bank’s latest monetary easing move, aimed to revive the European economy which is facing persistent crisis, met a mixed reaction from economists on Friday.

Economists from international financial institutions are generally doubtful about the success of the ECB’s new program which is meant to stimulate inflation and growth in the Eurozone.

Speaking at a conference in Paris, Benoit Coeure, a member of the Executive Board of the ECB said, "The measures we announced on March 10 2016 form a very substantial package which gives priority to loans for households and businesses, and thus supports the recovery."

"But the ECB cannot single-handedly create the conditions for a sustainable recovery in growth. This requires a concerted effort in terms of economic and fiscal policies," he added.

Vice-President of the ECB Vítor Constancio also gave a speech in London on Monday.

In his remarks, he focused on ways in which the Capital Markets Union (CMU) could contribute to the achievement of the most important tasks of the Euro system while enhancing the economies and welfare of the euro area.

“The leverage of alternative investment funds in the European Union should be better controlled as it has the potential to create and amplify systemic risk," said Constancio.

- Stocks and Economic data

Britain and Germany’s largest stock companies are to merge after striking a deal that will create one of the world’s largest exchanges.

Deutsche Borse and the London Stock Exchange (LSE) – the largest exchanges in Europe by market capitalization – said the new combined company would be based in London and that the deal contained a clause stipulating that Britain remain as an EU member.

The German company’s Chief Executive Carsten Kengeter and LSE Chairman Donald Brydon would retain their roles in the new company.

Last week there was encouraging news from employment data. The number of persons employed increased by 0.3 percent in the Euro area  and by 0.1 percent in the European Union (EU) in the fourth quarter of 2015 compared with the previous quarter, according to national accounts estimates published by Eurostat; the statistical office of the European Union.

When compared to the same quarter of 2014, employment grew by 1.2 percent in the euro area, and by 1 percent in the EU in the fourth quarter of 2015.

But the inflation rate remains in negative territory.  According to Eurostat, the Euro area’s annual inflation was -0.2 percent in February 2016, down from 0.3 percent in January 2016. In February 2015 the rate was -0.3 percent.

The European Union’s annual inflation was also -0.2 percent in February 2016, down from 0.3 percent in January.

- News from Germany

Last week saw a scarcity of data from Germany. However, the German rail operator Deutsche Bahn reported a net loss of €1.3 billion last year. The 2015 loss came despite the record turnover of €40.5 billion.

- Next week ahead

This week, the global markets will monitor data on Eurozone inflation, as well as news from the ECB.

24 Mar,2016