WHERE IS MONETARY POLICY GOING ? GLOBAL OFFICIAL INSTITUTIONS - PowerPoint PPT Presentation

WHERE IS MONETARY POLICY GOING ? GLOBAL OFFICIAL INSTITUTIONS CONFERENCE JACQUES DE LAROSIÈRE Paris, 21st June, 2018

1 CENTRAL BANK REAL POLICY RATE, % (DEFLATED WITH CORE INFLATION) ECB, repo rate FED, target Fed Funds BOJ, overnight call rate 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 -0.5 -1.0 -1.5 -2.0 -2.5 Source: Central Banks, Thomson Reuters Global Official Institutions Conference | 21/06/2018 | 2

2 OUTPUT GAP, % Euro zone US Japan 4 3 2 1 0 -1 -2 -3 -4 -5 -6 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018f Source: OECD, May 2018 Global Official Institutions Conference | 21/06/2018 | 3

3 CENTRAL BANK POLICY RATE, % ECB, repo rate FED, target Fed Funds BOJ, overnight call rate 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 -0.5 Source: Central Banks Global Official Institutions Conference | 21/06/2018 | 4

4 CENTRAL BANK BALANCE SHEET, AS % OF GDP ECB FED BOJ 100 90 80 70 60 50 40 30 20 10 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: Central Banks, Thomson Reuters Global Official Institutions Conference | 21/06/2018 | 5

5 REAL GDP GROWTH, Y/Y % EZ19 US Japan 6 3 0 -3 -6 -9 Source: Eurostat, BEA, Cabinet Office Global Official Institutions Conference | 21/06/2018 | 6

6 FINANCIAL CONDITIONS ARE STILL LOOSER, IN SPITE OF US TIGHTENING OF MONETARY POLICY Source: CaixaBank, Monthly Report MR04, April 2018 Global Official Institutions Conference | 21/06/2018 | 7

7 CENTRAL BANK POLICY RATE, % ECB, repo rate FED, target Fed Funds BOJ, overnight call rate 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 -0.5 Source: Central Banks Global Official Institutions Conference | 21/06/2018 | 8

8 CENTRAL BANK BALANCE SHEET, AS % OF GDP ECB FED BOJ 100 90 80 70 60 50 40 30 20 10 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: Central Banks, Thomson Reuters Global Official Institutions Conference | 21/06/2018 | 9

9 CORE INFLATION RATE (CONSUMER PRICE INDEX EXCL. FOOD & ENERGY, Y/Y %) Euro zone US Japan Brent oil price, y/y % (RHS) 3 120 100 2 80 60 1 40 20 0 0 -20 -1 -40 -60 -2 -80 Core inflation rate has remained remarkably stable over the last 13 years Source: Eurostat, BLS, Ministry of Internal Affairs and Communications, Thomson Reuters Global Official Institutions Conference | 21/06/2018 | 10

10 HEADLINE INFLATION RATE (CONSUMER PRICE INDEX, Y/Y %) Euro zone US Japan Brent oil price, y/y % (RHS) 6 120 5 100 4 80 3 60 2 40 1 20 0 0 -1 -20 -2 -40 -3 -60 Source: Eurostat, BLS, Ministry of Internal Affairs and Communications, Thomson Reuters Global Official Institutions Conference | 21/06/2018 | 11

10b GROWTH IN THE EURO AREA HAS PICKED UP SINCE 2014 1.0 1.0 0.8 0.8 0.8 0.6 0.6 0.6 0.6 0.6 0.5 0.5 0.5 0.5 0.4 0.5 0.50.4 0.4 0.4 0.4 0.3 0.3 0.3 0.3 0.2 0.2 0.0 0.0 0.0 -0.2 -0.2 -0.2 -0.4 -0.3 -0.3 -0.4 -0.4 -0.6 2010 2011 2012 2013 2014 2015 2016 2017 Global Official Institutions Conference | 21/06/2018 | 12

11 CENTRAL BANK BALANCE SHEET, AS % OF GDP ECB FED BOJ 100 90 80 70 60 50 40 30 20 10 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: Central Banks, Thomson Reuters Global Official Institutions Conference | 21/06/2018 | 13

12 BANK LENDING RATES TO NONFINANCIAL CORPORATES, 1-5 YEARS MATURITY, % Euro zone Germany France Italy Spain 7 6 5 4 3 2 1 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: ECB Global Official Institutions Conference | 21/06/2018 | 14

12b A SIGNIFICANT PART OF SOVEREIGN YIELDS IS STILL NEGATIVE IN NOMINAL TERMS Suisse Japon Allemagne France Espagne Italie Etats-­‑Unis 1Y -­‑0,80 ¡ -­‑0,13 ¡ -­‑0,64 ¡ -­‑0,58 ¡ -­‑0,37 ¡ 0,52 2,31 2Y -­‑0,74 ¡ -­‑0,13 ¡ -­‑0,59 ¡ -­‑0,49 ¡ -­‑0,16 ¡ 1,00 2,53 3Y -­‑0,64 ¡ -­‑0,11 ¡ -­‑0,49 ¡ -­‑0,34 ¡ -­‑0,01 ¡ 1,32 2,67 4Y -­‑0,51 ¡ -­‑0,10 ¡ -­‑0,33 ¡ -­‑0,15 ¡ 0,23 1,69 2,79 5Y -­‑0,43 ¡ -­‑0,10 ¡ -­‑0,14 ¡ 0,02 0,51 1,98 2,81 6Y -­‑0,28 ¡ -­‑0,07 ¡ -­‑0,02 ¡ 0,29 0,68 2,28 2,91 7Y -­‑0,17 ¡ -­‑0,04 ¡ 0,11 0,45 0,88 2,47 2,91 8Y -­‑0,10 ¡ -­‑0,02 ¡ 0,24 0,61 1,12 2,62 2,99 9Y -­‑0,014 0,02 0,37 0,71 1,30 2,77 3,02 10Y 0,064 0,05 0,49 0,88 1,44 2,86 2,96 15Y 0,374 0,26 0,64 1,26 1,98 3,19 3,11 20Y 0,523 0,53 0,91 1,37 1,98 3,38 3,12 30Y 0,629 0,73 1,18 1,73 2,58 3,59 3,10 Source: Bloomberg Global Official Institutions Conference | 21/06/2018 | 15

13 OUTPUT GAP, % Euro zone US Japan 4 3 2 1 0 -1 -2 -3 -4 -5 -6 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018f Source: OECD, May 2018 Global Official Institutions Conference | 21/06/2018 | 16

14 LABOUR PARTICIPATION RATE, % (15 TO 64 YEARS OLD) Euro zone Japan US 78 76 74 72 70 68 66 2000 2002 2004 2006 2008 2010 2012 2014 2016 Source: World Bank Global Official Institutions Conference | 21/06/2018 | 17

15 UNEMPLOYMENT IS RECEDING IN THE EURO AREA, BUT REMAINS HIGH NOTABLY IN SOUTHERN COUNTRIES Euro zone US Japan 13 12 11 10 9 8 7 6 5 4 3 2 Source: Eurostat, BLS, Ministry of Internal Affairs and Communications Global Official Institutions Conference | 21/06/2018 | 18

16 NOMINAL WAGES GROWTH, Y/Y % Euro zone, wages & salaries 6 US, average hourly earnings, total private Japan, scheduled cash earnings, all industries 4 2 0 -2 Source: Eurostat, BLS, Ministry of Health, Labour & Welfare Global Official Institutions Conference | 21/06/2018 | 19

17 THE HETEROGENEITY IN CURRENT ACCOUNT IMBALANCES IS STRICKING: GERMANY +8%, FRANCE -2% 10 GER IR 5 EZ IT SP 0 PT GR FR -5 -10 -15 GR IT PT IR EZ FR DE ES -20 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17e 18f Global Official Institutions Conference | 21/06/2018 | 20

18 FISCAL POSITIONS ARE IMPROVING IN PERIPHERAL COUNTRIES 4 0 -4 -8 GR IT PT IR -12 EZ FR ES -16 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015e 2016f Global Official Institutions Conference | 21/06/2018 | 21

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