ECB's Coeure: Eurozone Firms Risk Payment Disruptions On SEPA Migration

Eurozone firms that are delaying the changeover to a new payment system risk disruptions, European Central Bank Executive Board member Benoit Coeure said Thursday.

The deadline for euro area countries to migrate to the Single Euro Payments Area (SEPA) credit transfer and direct debit schemes is set at February 1, 2014. The SEPA initiative aims to overcome technical, legal and market barriers between countries in order to create a single market for retail payments in euro.

Thirty-three countries in Europe will participate in SEPA. With only 100 days left to go, the changeover process is now entering a critical phase, the central bank said.

In its second report on the SEPA migration process, released on Thursday, the ECB said that many key stakeholders have decided to migrate only in the last quarter of 2013, or even later.

This approach generates operational risks and limits the ability to tackle any issues or unexpected developments that might arise during the changeover period, the central bank cautioned.

"I have said this before and will repeat it: everybody has to be ready on 1 February 2014 or risk disruptions in their individual handling of payment orders," Coeure said.

The ECB report pointed out some of the risks posed by a "big bang" late migration that include capacity issues and bottlenecks on the side of the providers and software vendors at the end of the year. Further, end users may find themselves short of time to adapt to the payment service providers' new standards as well as to test their own systems sufficiently, the report said.

The migration to the SEPA credit transfer scheme is progressing fell, the ECB report said. A few countries in the euro area have already completed the process, while many others are progressing at a swift pace, it added. However, many businesses have delayed the switch to the SEPA direct debt scheme till the last few months before the deadline.

"A successful migration will require considerable effort, so it is important to further strengthen communication and cooperation among key stakeholders and competent authorities at the national level", Coeure said.

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2013-10-25 20:23

Positive Development In Eurozone Dims Rate Cut Scope, Says ECB's Nowotny

The recent "stream of good news" from Eurozone reduced the need for further interest rate reduction, European Central Bank's Ewald Nowotny said in an interview with the Bloomberg news agency.

"I would not see many arguments now for a rate cut," Nowotny, who heads Austria's central bank said. But the most recent developments will not have any immediate effects on the policy of the ECB.

The main refinancing rate remains at record low 0.50 percent. The interest rate was last reduced by a quarter-basis point in May.

Nowotny said he is "cautiously optimistic" about the economic outlook. The Eurozone recovery is weak, he noted.

The recovery in Germany and France helped the 17-nation euro currency bloc to exit recession in the second quarter. Eurozone GDP grew at a pace of 0.3 percent.

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2013-8-23 17:42

U.K. Visible Trade Gap Narrows On Record High Exports

The U.K. visible trade deficit narrowed more-than-expected to a near 1-year low in June, thanks to record exports amid slower increase in imports.

The deficit on goods trade declined to GBP 8.1 billion in June, the lowest since July 2012, from GBP 8.7 billion in May, the report released by the Office for National Statistics showed Friday.

The decrease of GBP 0.6 billion remains within the range of normal month-on-month movement, the ONS said. The number was also below the expected GBP 8.35 billion deficit.

The visible trade deficit was partially offset by an estimated surplus of GBP 6.5 billion on services. As a result, the total trade deficit fell to GBP 1.5 billion from GBP 2.6 billion in the previous month.

Exports of goods rose by GBP 1.3 billion to a record GBP 26.9 billion in June, while imports increased by a moderate GBP 0.7 billion to GBP 35 billion.

In the second quarter, the deficit on trade in goods reduced to GBP 24.9 billion from GBP 26.5 billion in the previous quarter, the ONS said.

Exports of goods reached GBP 78.4 billion, the highest on record. Likewise, imports of good increased to GBP 103.3 billion, the strongest level since the three months to November 2011.

Exports to countries outside the EU climbed 7.5 percent to over GBP 40 billion for the first time. At the same time, exports to the EU countries gained 2.3 percent.

Looking ahead, IHS Global Insight's Chief U.K. Economist Howard Archer said the hope is that a competitive pound and gradually improving global growth increasingly supports exports.

Nonetheless, Capital Economics' economist Martin Beck said growing signs of a consumer-led recovery, as well as the increased import demand implies that the trade deficit will probably struggle to narrow further over the coming months.

Another report from ONS revealed that construction output advanced 1.4 percent sequentially in the second quarter. It was estimated to have increased by 0.9 percent, while calculating GDP figures. But the agency said the revision has no effect on initial GDP estimate.

According to preliminary estimates, the pace of economic growth doubled to 0.6 percent from 0.3 percent in the first quarter.

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2013-8-9 17:42

BoE's Fisher Says British Economy Remains Weak, Downplays Bullish Outlook

UK's economy remains vulnerable to risks despite recent economic data indicating a strong pick up in activity, Bank of England policymaker Paul Fisher said Wednesday. He cautioned that growth will likely remain weak in the near term and the economy will take a longer time to recover than the United States.

Dismissing the recent positive economic data as insignificant, BoE's head of markets noted that it is imperative to keep monetary policy loose for a long period to achieve growth that is in line with trend.

Fisher said that the macroeconomic outlook in the U.K. is not as good as in the U.S, where inventors had belatedly realized that a recovery is possible.

Addressing a gathering of business persons, Fisher said that house prices in the U.K. are too high and urged lenders to pass on their lower funding costs on to clients. Terming the government's Funding for Lending scheme a success, he called for actions conducive to increase the number of transactions in order to raise demand.

In an interview given to The Times earlier the policymaker reserved his comment on his stance on BoE governor Mervyn King's proposal to split the Royal Bank of Scotland (RBS) into a "good" bank and a "bad" bank. He said that it is possible to privatize the RBS if a two-year program is prepared for the same.

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2013-6-13 19:41

Modest Gain In Eurozone PMI Revives Recovery Hopes

An indicator of Eurozone's private sector activity improved more than expected in May, renewing hopes that the economy is inching towards a recovery. Nonetheless, the indicator remained in negative territory, signaling sharp deterioration in overall business activity.

The composite output index, which measures the performance of the both manufacturing and service sectors, rose to a three-month high of 47.7 in May from 46.9 in April, flash results of a survey by Markit Economics showed Thursday.

Readings below 50 indicates contraction in activity. Economists had predicted an increase in the index to 47.2.

New orders across the private sector fell sharply again in May and for the twenty-second successive month. The rate of decline was unchanged from that seen in April, Markit said.

The modest improvement in May raises hopes that overall Eurozone economic activity is inching towards stabilization, said Howard Archer, Chief European and UK Economist at IHS Global Insight.

"It is worrying to see that the decline in new orders was unchanged at a significant level in May, so a seventh successive quarter of Eurozone GDP decline, albeit modest, remains very possible in the second quarter," Archer said.

The purchasing managers' index, a gauge of activity in the manufacturing sector, rose to 47.8 from April's score of 46.7. This was forecast to rise to 47. The manufacturing output index rose to a four-month high of 48.2 from 46.5 in April.

The services activity index edged up to 47.5 in May from 47 in the previous month, while expectations were for a modest increase to 47.2.

Eurozone's economic downturn eased in the first quarter with the gross domestic product falling at a slower pace of 0.2 percent quarter-on-quarter.

In May, the European Commission cut its economic forecast for euro area and said the economy will contract 0.4 percent in 2013. The economy is expected to start recovering from its record-long recession in 2014.

"May's euro-zone PMI survey adds to the recent run of slightly more encouraging news from the region, but there is little sign that the region is about to emerge from recession," said Ben May, an economist at Capital Economics.

Earlier in the month, the European Central Bank reduced the main refinancing rate by 25 basis points to a record low 0.50 percent to support the economy. ECB Chief Mario Draghi has said that the monetary policy will remain accommodative "as long as needed."

Markit said that the employment at Eurozone's private sector firms fell for the seventeenth consecutive month, with the rate of job losses rising to the highest since February.

The survey found strong divergences between the region's two largest economies. Business activity declined for a second successive month in Germany, but the downturn was only very marginal. Meanwhile, a steep rate of decline in French activity was reported in May.

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2013-5-23 16:28

Russia's Economy Can Grow 3-4%, Presidential Adviser Says

Russia's economic growth rate is below potential, Russian Presidential Adviser Elvira Nabiullina said, according to news agency Itar-Tass.

But it can grow at 3-4 percent this year, Bank Rossii Governor-designate Nabiullina said. She said institutional reforms are needed for better growth.

The central bank is under immense pressure to cut rates to contain slowing growth. It has kept its key rate unchanged at 8.25 percent for the seventh consecutive month, but reduced rates on long-term liquidity operations by a quarter point in April as it sees increased risks to economic growth.

The bank said the macroeconomic indicators pointed to a continuing deceleration of economic growth and increased risks of its deceleration.

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2013-4-18 12:42

New Zealand Dollar Overvalued, IMF Says

The New Zealand dollar is currently stronger than would be consistent with medium term fundamentals and "appears to be overvalued," the International Monetary Fund said in a report on Monday.

The gap between domestic and foreign interest rates, and more recently, increased portfolio flows into New Zealand are contributing to the current level of the exchange rate, the Washington-based lender said in the report.

IMF noted that if global monetary policy were to become less stimulatory, the exchange rate would likely depreciate over time. The government's deficit reduction plan also eases upward pressure on the exchange rate, it said.

The report also noted that economic growth may accelerate this year with an increase in construction activity offsetting headwinds from budget deficit reduction, the strong dollar, and the possibly protracted impact of the severe drought.

IMF also noted that the government's fiscal consolidation path strikes a balance between the need to limit both public and external debt increases while containing any adverse impact on economic growth.

Finance Minister Bill English welcomed the IMF statement and said the assessment reflects "the balanced and pragmatic approach the Government had taken with its economic program over the past four years."

IMF expects underlying inflation to increase but remain modest. Persistently high exchange rate is dampening tradable price inflation and wage pressures remains contained, the Fund said.

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2013-3-19 11:42

Australia Consumer Sentiment Highest Since December 2010

Confidence among Australian consumers rose to its highest level in more than two years in March with the effects of the past interest rate cuts by the Reserve Bank becoming more visible.

A survey by Westpac and the Melbourne Institute showed Wednesday that the consumer sentiment index rose 2 percent in March to 110.5 from 108.3 in February. This is the highest level of the index since December 2010.

"This is a strong result," Westpac's Chief Economist Bill Evans said. It is the fifth consecutive month that the index has registered above 100, he noted.

Evans said that in recent months, the accumulation of the cuts appeared to be genuinely boosting confidence. Since October last year, the confidence index has increased 11.5 percent.

The Reserve Bank of Australia kept the cash rate unchanged at 3 percent in February and March, but said there is scope to ease policy further, if necessary, to support demand.

The central bank has reduced cash rate six times since it started its easing cycle in November 2011.

Also, "equity markets and the associated signals that global economic prospects are improving are the other key driver of this improved confidence," Evans said.

Data released by the Australian Bureau of Statistics on Wednesday showed that home loans declined unexpectedly in January. The number of dwelling commitments for owner occupied housing fell 1.5 percent month-on-month to 44,383.

Economists had forecast an increase of 0.5 percent following 2.1 percent fall in December. Lending has now declined for four consecutive months. Meanwhile, investment lending rose 4.4 percent from the previous month.

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2013-3-13 11:14

S&P Affirms Japan's Credit Ratings

Standard & Poor's on Monday said it is affirming its credit ratings on Japan, citing the sovereign's strong external position and a recovered financial system.

The rating agency affirmed the long- and short-term credit ratings at AA- and A-1+, respectively. The outlook on the long-term ratings remained 'negative.'

S&P said its rating on Japan balances the extremely strong external position, prosperous and diversified economy, and its recovered financial system with a very weak fiscal position, aging demographics, and persistent deflation.

"We believe the measures adopted by the new Shinzo Abe administration at the beginning of its term will be critical if it is to arrest what we see as a prolonged decline in Japan's sovereign credit standing," the rating agency said in a report.

Meanwhile, during a debate in Parliament on Monday, Prime Minister Shinzo Abe indicated that if Japan is unable to attain the 2 percent inflation target, there may be a need to revise the law governing the central bank.

He also clarified that the recent policy moves are not directly aimed at weakening the yen, but is just one of the many factors influencing the exchange rate.

The meeting of finance ministers and central bankers of the Group of Twenty in Moscow over the weekend abstained from directly criticizing Japan for the recent depreciation of yen. Instead, they supported the policy actions taken by the new government and the Bank of Japan to stimulate economic growth.

At the same time, G20 vowed to refrain from competitive devaluation. "We will not target our exchange rates for competitive purposes, will resist all forms of protectionism and keep our markets open," the ministers and central bankers said in a statement on Saturday.

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2013-2-18 10:20

U.K. Lawmakers Say Treasury Unaware Of QE Impact

U.K. lawmakers on Friday said the Treasury could not explain the effect of the quantitative easing on the whole economy. The panel said some GBP 375 billion has so far been injected into the economy as an 'experiment'.

"The Treasury has not convinced us it understands either the risks it has taken on by indemnifying the Bank of England against losses on Quantitative Easing or the expected economic benefits," the Public Accounts Committee said in an annual report.

Further, lawmakers said, "The Treasury's attempts to stimulate economic growth through new lending have, so far, not been successful." The treasury should be clear what it wants this BoE scheme to achieve and how it intends to monitor it.

"Throughout, the Treasury seems to be embarking on a series of expensive experiments, indemnified with taxpayers' money," the report said.

The panel observed that high staff turnover reduced the Treasury's ability to respond to crises and manage public spending effectively. Although staff turnover declined in 2011-12, it is still "very high."

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2013-2-15 11:17

Ireland To Record Stronger Growth This Year: IBEC

The Irish economy has stabilized in the second half of last year and is set to grow at a faster pace in 2013, marking the third successive year of reasonably solid growth, the Irish Business and Employers Confederation (IBEC) said Monday.

The IBEC, in its latest quarterly outlook, said that 2013 would mark a turning point for the Irish economy, with GDP growing 1.8 percent on the back of strong domestic demand and exports. The recovery is expected to gain further momentum in 2014.

"Although many Irish households continue to grapple with debt and unemployment, there is growing evidence that 2013 could be a turning point for the domestic economy," IBEC Chief Economist Fergal O'Brien said.

The estimated growth for this year represents an improvement from the 1.2 percent expansion projected for last year, which was supported by another record performance by the export sector. Ireland is the second fastest growing Eurozone economy in 2012.

Driving the recovery, private sector employment improved significantly in the third quarter of last year, and retail sales finished the year on a positive note. At the same time, the housing sector has seen prices stabilizing and housing transactions and new mortgage activity increasing, IBEC said.

The employers' group predicted that Ireland is set to record an annual inflation rate of 1.5 percent this year, which will move up to less than 2 percent in 2014.

At the same time, unemployment is forecast to stabilize and to remain high for some time, while private sector employment will start recovering with a modest growth of 0.4 percent in 2013.

"Exports continue to perform strongly, despite difficult trading conditions. Importantly, we're seeing more businesses successfully making the transition from domestic sales to exports, and progress continues in developing new markets," O'Brien added.

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2013-1-21 15:42

Japan Considering JPY 12 Trillion Stimulus: Reports

The Japanese government is planning around JPY 12 trillion in stimulus spending for the economy in the fiscal year 2012, reports said Monday. news.instaforex.com »

2013-1-7 10:50