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Politics and central banks take centre stage

Published: Wednesday 11 September 2019

  • Australia may need further monetary stimulus measures
  • European banks up in arms ahead of European Central Bank meeting
  • Trump verus the world

The UK Labour party’s deputy leader, Tom Watson, will make statements today calling the party to demand a second referendum on leaving the EU, which must take place before a general election. He is also encouraging Labour to campaign against Brexit.
Many people are wondering what options the Prime Minister has left after losing six votes in the House of Commons in six days. Well, unsurprisingly, his options are narrowing and it is highly unlikely that he will manage to deliver his promises to lead the UK out of Europe on 31st October “with or without a deal”. Now that the legal (or illegal) elements have been confirmed, he can either resign, ignore the law (facing all the consequences that would follow) or pass an existing deal. We will see what happens there…
Australia may need further monetary stimulus measures
Analysts report that there has been a significant 1.7% drop in the Westpac-Melbourne Institute Index of Consumer Sentiment. It declined from 100 in August to 98.2 in the current month. Westpac analyst Bill Evans reports that “The consumer mood has lapsed back into slight negative territory again with continued pressure on family finances and concerns about the near term outlook weighing on sentiment.”
The National Australia Bank (NAB) has claimed that there is the possibility that Australia’s central bank could carry out further interest rate cuts, potentially three more times, unless the government takes measures to foster fiscal incentives. The NAB has also stated that the Reserve Bank of Australia (RBA) will respond to the growing risks at home and abroad by easing monetary policy in November and February.
European banks up in arms ahead of European Central Bank meeting

European banks are intensifying their protests against low interest rates ahead of the European Central Bank (ECB) meeting on Thursday, where it is predicted that the central bank will build a policy that will slow down their profits by furtherly cutting interest rates and offering free loans. Ahead of the ECB meeting,

Germany presents some encouraging data this time, as 30-year government bond yield has (slightly) turned positive on Tuesday for the first time in over a month. This was caused by the fiscal stimulus forecasts, but also by the uncertainty over whether the ECB will launch asset purchases this week.

Trump versus the world
Unsurprisingly, US President Donald Trump is the primary source of news on the United States’ front. He announced yesterday that he fired his Security advisor, John Bolton, claiming that “his services were not needed anymore”. Donald Trump expressed strong disagreements with the way John Bolton handled a number of foreign policy challenges with North Korea, Iran, Afghanistan and Russia. He will announce a new Security Advisor next week.
In the meantime, a survey carried out by a prominent American business association reveals that the current US-China trade war is having a major negative impact on profits and investments for US based companies.

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