Output Gap narrowing & inflation
Output Gap narrowing & inflation The narrowing of output gaps across the developed world lends credence to predictions of rising prices. The theory states this should translate into stronger pricing power for both companies and labour, both of which are inflationary. That point could be breached in post 2018 period.Read More →
US inflation sceptics
US inflation sceptics Inflation sceptics still abound in the US. They cite a broken Phillips curve, technology, and the ‘Amazon’ effect depressing retail prices as factors explaining why inflation is low and will remain so. However , pure concentration of being productive has led the US workers to a pointRead More →
The current account surplus remains large
The current account surplus remains large The current account surplus is expected to be about 8% of GDP in 2016, as lower oil prices limit the import bill and euro depreciation boosts exports. The current account surplus vis-à-vis other euro area countries has also risen since 2013 reflecting the gradualRead More →
Low Interest Rates
Low Interest Rates Low interest rates are primarily affecting profit margins of small and medium-sized banks which depend the most on deposits for funding. Most of these institutions will be able to withstand the strains caused by the low interest rates, as they are relatively well capitalised (Deutsche Bundesbank, 2015).Read More →
Risks from the low interest rate environment have so far been limited
Risks from the low interest rate environment have so far been limited Easy monetary conditions do not appear to have led to excessive asset prices or lending. Increases in house prices have been broadly aligned with rising household income and rental prices (Deutsche Bundesbank, 2015), although in some of theRead More →
Euro area monetary conditions have eased further
Euro area monetary conditions have eased further While the European Central Bank kept policy rates higher than the monetary authorities of the UK and the US until 2013, its policy stance has been highly expansionary recently. The European Central Bank (ECB) reduced policy rates further and has engaged in unconventionalRead More →
Challenging landscape
Challenging landscape To succeed in this environment, investment banks will have to negotiate a challenging landscape. One important concern for investment banks is that the IT development required to address regulatory concerns may have ‘crowded out’ other important, forward-looking technology investment. Clients, for example, value web portals and electronic tradingRead More →
Decreased revenues
Decreased revenues Over the last five years, investment banks have dealt with decreased revenues through cost reductions, while maintaining, for the most part, reasonably strong ties to their clients. Over the next five years, however, this picture could change dramatically due to a number of key factors: • Deadlines forRead More →