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Draghi's ECB: Bottom of the table

The ECB now aims to return its balance sheet back to 2012 levels. But meeting that ambition, in the near term at least, is going to be extremely difficult. And, even if it can, both the nature and size of the balance sheet increase it implies is puny relative to what the world’s other major central banks have undertaken. 

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ECB Preview: Will Draghi rise to the occasion?

For Draghi not to prove a big disappointment tomorrow, he needs at least to maintain the language he used at Jackson Hole as well as provide strong hints of further action to come. Failure to do either would be bad news for euro area government bonds and good news for the euro. And it would also signal that his attempt in Jackson Hole to bounce the Governing Council into QE had failed, for now at least, leading to a general downgrading of the probability of QE that has been priced in post-Jackson Hole.

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UK Bank Rate: Slackers hold the key

The performance of the UK labour market over the past year or so has confounded all expectations. And today’s data showed a further drop in the unemployment rate, to just 6.4% in the three months to June. But the MPC also today revised down its estimate of the equilibrium unemployment rate and its forecast of wage growth. As such, Mark Carney was able to stick to his mantra that increases in Bank Rate, when they come, will be very gradual, and that the eventual resting point for Bank Rate will be significantly below what had been usual in the pre-crisis period.

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Japan's Q2 GDP: No show-stopper

Japan’s GDP plunged in Q2 at the steepest rate since the 2011 earthquake, with consumer spending plummeting at a record pace. But evidence points to a rebound in the current quarter. The BoJ won’t be panicked into easing policy further. And today’s data certainly do not represent a show-stopper for Abenomics.

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TLTROs: Never Mind the Placebo

The ECB’s TLTRO programme begins next month. While the funding should allow banks to refinance more cheaply, is it really much more than a placebo for the euro area’s economic ills?

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