ECB President Mario Draghi, speaking at Sintra, has raised expectations of renewed policy easing.The message from the FOMC meeting is that rate cuts are coming. This policy synchronisation reflects shared issues (inflation too low versus target) and shared concerns, the major being rising uncertainty. Should this continue, the effectiveness of monetary accomodation will suffer.
Despite a quite good 1st quarter 2019 in terms of economic growth (+0.4% q/q), the latest economic indicators sent mixed signals. Worries about the Purchasing Managers’ Index (PMI) in the manufacturing sector remain despite its stabilization, at a low level, in June (47.8). In the services sector, the PMI seems to be unaffected by the manufacturing woes.
