You've given us a great summary of the performance of the economy, how it's performing, what is likely to how it's likely to inform, what's your policy outlook. And maybe you can go back to December when you had to project for the year, which makes it somewhat independent of the arrival of a new chair. What do you think the policy picture.How many rate cuts, for example, in 2026. So for me, I didn't have any luck. To me, I think we have so much momentum in the economy that we need to keep our policy rate in ...

Summary of Euro Area Outlook 2026 Industry Overview - The report focuses on the Euro area economy and its outlook for 2026, highlighting both cyclical improvements and structural challenges. Key Points Economic Growth Forecast - Euro area growth is forecasted at **1.3%** for 2026, with a slight increase to **1.4%** on a Q4/Q4 basis, up from **1.3%** last year, aligning with consensus expectations [3][6][34] Factors Driving Cyclical Improvement 1. **German Fiscal Stimulus**: - Germany's fiscal expansion is expected to provide a significant boost, with the deficit projected to rise to **3.7%** of GDP in 2026, contributing **0.5 percentage points** to growth [9][12] 2. **Diminished Global Trade Tensions**: - The negative impact from global trade tensions is anticipated to lessen, with a previous **0.4%** hit to real GDP from tariffs expected to fade [15][19] 3. **Robust Consumer Spending**: - Real household income growth is projected at **1.5%**, with consumption growth also expected at **1.5%** in 2026, supported by lower energy prices [19][44] Structural Headwinds - Despite cyclical improvements, significant structural challenges remain: - Increased competition from China's renewed export push is expected to negatively impact European trade, particularly affecting Germany (estimated **0.9%** hit to GDP) and Italy (estimated **0.6%**) [23][30] - High energy costs, underinvestment in high-tech sectors, regulatory burdens, and demographic shifts are identified as ongoing domestic challenges [27][30] Labour Market and Inflation - Unemployment rates are expected to remain near historic lows, with wage growth projected to slow to **2.9%** by the end of 2026, aligning with a medium-term inflation target of **2%** [37][41] - Core inflation is expected to dip slightly below **2%** by the end of 2026, influenced by a stronger Euro and lower energy prices [44][50] Monetary Policy Outlook - The European Central Bank (ECB) is expected to maintain current rates in 2026, with potential cuts requiring a clear catalyst, such as a significant economic downturn or a pronounced inflation undershoot [48][51] - A return to rate hikes would depend on demand-driven inflationary pressures or significant shocks leading to deviations from inflation targets [55][56] Country-Specific Focus - **Germany**: Monitoring the quality of public spending and reform agenda is crucial for improving medium-term growth [62] - **France**: Political and fiscal risks remain, with a projected government deficit reduction from **5.4%** to **5.1%** of GDP in 2026 [66] - **Southern Europe**: Continued economic resilience is noted, with structural transformations in Spain, Portugal, and Greece [71] Policy Initiatives - EU policymakers have an opportunity to implement reforms that could enhance economic performance, focusing on reducing vulnerabilities and building a single market [74] Additional Insights - The report emphasizes the importance of monitoring fiscal policies and structural reforms across member states to sustain the cyclical recovery and address long-term challenges [4][61]

The Bank of Japan shows growing conviction that it can attain the stable inflation target it has pursued for more than a decade: Here is your Evening Briefing. https://t.co/g2aYy9qp9D ...

Group 1 - The Federal Reserve is experiencing internal disagreements regarding interest rate cuts, with some members advocating for a larger cut while others prefer to pause until more clarity on inflation is obtained [1][2][3] - The November consumer price index (CPI) showed annual inflation at 2.7%, which is lower than the estimated 3.1%, indicating a potential trend towards the Fed's 2% target [2][4] - Fed President Austin Goulsby expressed cautious optimism about the CPI report but emphasized the need for sustained progress in inflation and employment data before supporting further rate cuts [4][5][8] Group 2 - The current unemployment rate is reported at 4.6%, which raises concerns about the balance between inflation control and labor market stability [6][12] - Goulsby highlighted the importance of analyzing the components of inflation, noting that improvements in goods prices must not be offset by rising services inflation, which tends to be more persistent [10][11] - The market is predicting a potential interest rate cut in March, with a 58% probability, indicating expectations for a more accommodative monetary policy if inflation trends continue positively [21][24]

Economic Policy & Currency - South Africa's new lower inflation target is giving the rand fresh momentum [1] - Policymakers and analysts agree the new target could curb a long-term track record of weakness for the rand [1]

South Africa’s central bank credits its new 3% inflation target for already helping guide expectations lower across the economy https://t.co/vOv6j89ofu ...

Where Does the Fed’s Inflation Target Stand Now? https://t.co/Co6Xkkb235 ...

South Africa is expected to lower interest rates, after the formal adoption of a 3% inflation target and the government’s display of fiscal discipline provided policymakers with room for easing https://t.co/z2BD6czm9t ...

Market Overview - Markets are hovering close to record highs, with discussions around whether the current valuations are sustainable or indicative of a bubble [1][10] - The S&P 500 is currently trading at 23 times earnings, with a target of 7,900 for the end of next year, suggesting a bullish outlook despite concerns about overvaluation [7][29] AI and Investment Sentiment - There is ongoing debate about whether the AI sector is experiencing a bubble, with some models indicating that major companies in this space are currently fairly valued [20][22] - The sentiment in the market tends to shift from greed during earnings season to fear afterward, creating potential entry points for investors [11][13] Technical Analysis - The moving average is highlighted as a key technical analysis tool, with the 50-day moving average recently breaking through in major indices, indicating potential market trends [24][25] - The importance of using moving averages to gauge entry and exit points in the market is emphasized, particularly in relation to valuation [26][31] Federal Reserve and Inflation - The Federal Reserve's inflation target of 2% has been a topic of contention, with arguments that it is too rigid and not reflective of current economic conditions [34][36] - The Fed's actions, particularly rate hikes, have historically led to recessions, and there is a call for a more flexible approach to monetary policy [39][51] Housing Market Insights - The housing market is currently in a recession, with construction starts below critical thresholds, but this has not yet led to a broader economic recession [48][51] - The impact of technology on the housing market is noted, as it offsets some of the slow growth seen in construction [43][44] Investment Strategies - A diversified investment approach is recommended, incorporating both income-generating assets and growth-oriented stocks, particularly in the current market environment [55][58] - The discussion includes a preference for riskier fixed income options and large-cap dividend stocks, while cautioning against investments in non-cash flow producing assets [57][59]

Do you think the 2% inflation target should be scrapped. >> I don't think it should be scrapped. I think it should be changed.I have been of the view that a better inflation target is a range, not a point estimate. A point estimate suggests precision that is elusive. Second, that range should be higher than 2%.It should be the two and a half to 3%. What is undeniable is that we are at a stable 3% inflation and that hasn't in any way unanchored inflationary expectations. ...