Friday, October 4, 2013

4/10/2013: Eurocoin: Cautious Return of Growth? September 2013


I have not updated my charts for Eurocoin in some time now, so might as well bring them up to September cover:


Eurocoin - the Banca d'Italia and CEPR joint leading indicator for growth in the euro area rose above zero, for the first time since September 2011, reaching +0.12 in September 2013. The rise was not statistically significant, but is nonetheless welcome. Growth forecast consistent with this level is 0.1% which is below Q2 2013 at 0.3 but that ignores the point that in Q2 2013 eurocoin run at an average of -0.143.


And updating monetary policy charts: growth is still being accommodated by historical standards, but caution on behalf of ECB is still excessive. Cutting rates to 0.25 or lower will be fine, even by inflation consideration (chart below):



And y/y change in inflation/growth relationship:


Inflation dampening while growth accelerating... hardly a scenario for sustained recovery, but we have seen periods with even more pronounced disconnect. 

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