Unsure effects of monetary printing in the euro countries – Aftenposten

Unsure effects of monetary printing in the euro countries – Aftenposten

– I am unsure if this was wise, answer chief economist Steinar Juel at Nordea Markets.

– I doubt whether this will be of help to relaunch the economy in the euro countries. I agree with German Chancellor Angela Merkel that lower interest rates on government bonds, which is an effect of the decision may make it easier for the euro area to relax, because it does not cost so much to refinance debt. There is a danger that pressure to implement reforms in the economy and bring down the government budget deficit becomes less important. It is also unfortunate that the ECB with its resolution split up between the ECB and the 19 national central banks in the eurozone over who should bear any losses on sovereign debt bought up. It testifies something missing mutual trust in the euro system. It is an unfortunate signal power.

– Market reaction was the positive.

– Yes, the market rejoices and sends euro down. There are market effects of ECB decision. The biggest effect on inflation think I will primarily come through a weaker euro. There is a catch to this. One of the reasons why the euro weakened against the dollar so far are great expectations that the US Federal Reserve (Fed) will raise interest rates later this year. But I do not think the Fed is insensitive to the significant strengthening of the dollar taking place. It may help to delay an interest rate increase.

– Norwegian kroner also strengthened when the euro weakens. That must be a positive news for the Norwegian economy?

– The fact that the euro weakened is not primarily a “dime story.” In the fixed income market are now pricing in three rate reductions from Norges Bank. Until ECB meeting Thursday were expectations of two interest rate cuts. Expectations in the market is that Norges Bank must follow up the decision of the ECB. I am very skeptical. We see that oil prices have risen slightly over the past week. Announced cuts in global oil production are likely to result, oil prices stabilized and comes up slightly again. Meanwhile, it can seem as though the housing market has gone completely off the handle, which is a result of the lower interest rate. This is something Norges Bank must take into account the next time. If this trend is confirmed by house price figures submitted in 14 days, coming Norges Bank in a dilemma.

– Does tron ​​shift in Saudi Arabia – the world’s largest oil producer and exporter – some influence oil prices and world economy?

– I think this has little or no significance. It seems that this is a well planned change of leadership without any drama. I can never imagine that Saudi Arabia is going to do something about oil production because of this.

Published: 24.jan. 2015 1:23 p.m.