“Governments with fiscal space should act in an effective and timely manner,” Draghi said, only two days after Germany, the euro zone’s largest economy, signaled it’s targeting another balanced federal budget next year. The euro zone economy is facing an extended slowdown and inflation is likely to stay clearly below the European Central Bank’s medium-term target, Draghi said.
(Bloomberg) — China said it is encouraging companies to buy U.S. farm products including soybeans and pork, and will exclude those commodities from additional tariffs, in the latest move to ease tensions before the two sides resume trade talks.
(Bloomberg) — Senior euro-area officials joined European Central Bank President Mario Draghi’s call for actions to boost growth, amid a brewing debate over the need for more fiscal stimulus to revitalize the region’s flagging economy.
Bond yields across the euro area have dropped into negative territory this year amid expectations for more stimulus from the ECB in the face of growing geopolitical risks from Brexit to the U.S.-China trade war. The euro, meanwhile, touched its lowest level in over two years earlier this month.
While Fed officials such as Chairman Jerome Powell repeat the mantra that the economy is in “a good place,” the risks to the outlook stemming from slower global growth and trade wars remain sufficient to justify rate cuts. As Powell explained again last week, the Fed believes that its dovish pivot toward a lower path for policy rates help explains the economy’s resilience in the face of that uncertainty.
Investing.com — The European Central Bank said Thursday it will restart its purchases of government bonds in an attempt to support a slowing eurozone economy. It also cut its deposit rate by 10 basis points to a new record low of -0.5% and said it would introduce a new regime to spare banks some of the pain of negative rates.
President Donald Trump downplayed a Bloomberg report that his administration was preparing to do a temporary deal with China, potentially rolling back some of the import tariffs recently imposed on Chinese goods.
(Bloomberg) — Turkey delivered another interest-rate cut that exceeded forecasts while signaling the central bank could now proceed with caution as it navigates the conflicting demands of the presidency and markets.
“As things change — also this forward guidance and the policy may change — not tomorrow, not the day after tomorrow, but I wouldn’t think it’s there for the next decades,” Robert Holzmann said in an interview with Bloomberg on Friday in Helsinki. Lagarde is not “a weak person who’ll say I’m locked in one or the other way.”