The most important events and reports on the economy, central banks and politics from the Dow Jones Newswires program
HSBC: ECB will emphasize long-term high interest rates
Following the unexpectedly low inflation figures in September, HSBC economists Fabio Balboni and Simon Wells see no need for further monetary policy tightening by the European Central Bank (ECB). “Nevertheless, we believe that the focus in communications will continue to be on the need to keep interest rates high for a long period of time,” they wrote in their outlook for the ECB Governing Council meeting on October 26th. The reason is the continued high wage growth, the new pressure on energy prices and the limited support from fiscal policy in combating inflation.
UBS: ECB is unlikely to discuss QT acceleration
According to UBS analysts, the Council of the European Central Bank (ECB) will not discuss accelerated balance sheet reduction (QT – quantitative tightening) next week. This is not necessary because of the increase in inflation-adjusted bond yields and bond spreads, they write in their outlook for the ECB Council meeting on 25/26. October. An increase in the minimum reserve is also not expected. The news agency Reuters had reported that the ECB Council could make a new attempt on this in the spring.
ECB/Enria: Adopt CDMI package quickly and completely
The European Parliament and the finance ministers of the euro area should adopt the proposals for crisis management and deposit insurance (CMDI) presented by the EU Commission as quickly and completely as possible. The head of the ECB banking supervision, Andrea Enria, said at a seminar on this legislative package, which, among other things, includes the inclusion of medium-sized banks in the resolution regime: “The end of the legislative period is fast approaching, and we only have a small window of time to do one to make significant progress on a central aspect of the banking union.”
KfW-Ifo credit hurdle increases
According to companies, the barriers to bank financing have increased again – significantly. The KfW-Ifo credit hurdle for medium-sized businesses will increase by 6.1 percentage points in the third quarter of 2023, as KfW announced. 31.7 percent of small and medium-sized companies in Germany classified their banks’ behavior in loan negotiations as restrictive. This means that the previous high since the survey methodology was revised in 2017 of 31.3 percent from the fourth quarter of 2022 has been slightly exceeded.
Ifo Institute: Companies are reporting even more cancellations in residential construction
More and more projects are being canceled in German housing construction. In September, 21.4 percent of companies were affected, after 20.7 percent in the previous month. “Many projects are no longer economically feasible due to higher interest rates and increased construction costs. The apartments that are not started today will be missing from the rental market in two years,” said Klaus Wohlrabe, head of the Ifo surveys.
IMK: Poorer households no longer suffer the most from inflation
For the first time since the wave of inflation began at the beginning of 2022, poorer households are no longer affected by the highest household-specific inflation rates in Germany. This is the result of the new inflation monitor from the Institute for Macroeconomics and Economic Research (IMK). The institute warned the European Central Bank (ECB) of the risk of “excessive” tightening in view of the easing price pressure monetary policy.
Scholz is traveling to Israel on Tuesday – report
According to a report by the news channel ntv, Chancellor Olaf Scholz (SPD) wants to travel to Israel on Tuesday. The broadcaster referred to government circles. The Bild newspaper reports that Scholz wants to travel to Israel in the next few days. The newspaper also quoted Israeli sources as saying that the visit should take place on Tuesday. The Federal Chancellery initially did not want to confirm the trip upon request. Scholz is expected at a meeting with the Western Balkan countries in Albania on Monday. Appointments in Berlin are planned for Tuesday morning.
Death toll in Gaza rises to around 2,750
According to Palestinian information, the number of deaths from Israeli attacks in the Gaza Strip has risen to around 2,750 people. Around 9,700 more people were injured, said the Ministry of Health in the Hamas-controlled Gaza Strip. The radical Islamic Palestinian organization Hamas launched a major attack on Israel on October 7th. According to Israeli figures, more than 1,400 people were killed. The Israeli army then put the Gaza Strip under constant fire and is preparing a ground offensive in the densely populated Palestinian area.
Israel: 199 hostages kidnapped by Hamas
The radical Islamic Hamas took 199 people hostage in its major attack on Israel over a week ago and deported them to the Gaza Strip. “We have informed the families of 199 hostages,” Israeli military spokesman Daniel Hagari told reporters. On Sunday, Israel reported the number of abducted hostages as 155. The hostages also include foreigners and people with dual nationality. The Foreign Office in Berlin is aware of eight cases related to Germany. “The effort to reach the hostages is a top national priority,” Hagari said. “The army and Israel are working around the clock to get them back.”
Army: Israel evacuates towns on border with Lebanon
Israel has announced the evacuation of towns on the border with Lebanon. In a joint statement, the Defense Ministry and the army announced “the implementation of an evacuation plan” for residents in northern Israel who live in a two-kilometer-wide strip on the border with Lebanon. They would be accommodated in government-funded accommodation. Since Hamas’ major attack on Israel, tensions on the Israeli-Lebanese border have also increased. The Israeli military closed the border area with southern Lebanon to civilians.
Biden: Possible Israeli occupation of Gaza would be ‘big mistake’
US President Joe Biden has described Israel’s possible plans to occupy the Gaza Strip as a “big mistake”. In an interview with the CBS news show “60 Minutes” published Sunday, Biden responded to a question about whether he would support an ally’s occupation of Gaza by saying, “I think that would be a big mistake.” Biden also said that the radical Islamic Palestinian organization Hamas, which rules in the Gaza Strip, “does not represent the entire Palestinian people.”
US House of Representatives votes again Tuesday on chairman
The US House of Representatives will make a new attempt to elect a leader on Tuesday. The vote is scheduled for 6 p.m. (CEST), MPs have been informed. The parliamentary chamber has been largely paralyzed for two weeks due to a power struggle within the Republican Party, and MPs are increasingly angry as a result.
+++ Economic data +++
Eurozone/Trade balance Aug surplus EUR 6.7 billion (previous year deficit EUR 54.4 billion)
Eurozone/Exports Aug +1.6%, imports -2.0% compared to previous month – seasonally adjusted
Eurozone/trade balance August seasonally adjusted surplus EUR 11.9 billion (July: surplus EUR 3.5 billion)
DJG/DJN/AFP/apo
(END) Dow Jones Newswires
October 16, 2023 07:30 ET (11:30 GMT)