The euro-zone economy may be roaring ahead but a rapidly strengthening euro may see European Central Bank President Mario Draghi pour cold water on the view the bank is speeding toward an interest rate hike.
Mr Draghi is expected to keep the ECB’s €2 trillion (Dh9.13tn) asset buying programme in place for now at Thursday’s ECB governing council meeting, while acknowledging Europe’s unexpectedly strong run of growth.
The real trick facing policymakers will be how to address the euro’s surge to a three year high against the dollar, which could dampen inflation and endanger the work done by years of unprecedented stimulus.
It will be a delicate balancing act: the euro’s 5 per cent rise since December holds back inflation which the ECB wants to see climb. But rapid economic growth and the expected end of the bond buys later this year justify some currency strength.
Wanting to keep all options on the table, Mr Draghi will likely seek to stop the euro from firming further, keeping markets in a holding pattern until policymakers are ready to unveil their blueprint for winding down stimulus, economists said.
Having bought more than €2tn worth of bonds over the past three years, the ECB has almost single-handedly depressed borrowing costs in the euro zone to kick start growth and lift prices. Markets now expect these often controversial asset buys to finally end in the last quarter of this year.
But predictions for tighter ECB policy are putting pressure on the currency and raising market bets for a rate hike as early as December, a move seen as premature even by the most hawkish of policymakers.
Inflation is also years away from rising back to the ECB’s target of 2 per cent, so Mr Draghi can hardly afford any big currency swings.
“We think ECB President Draghi’s priority will be to talk down growing expectations of early interest rate hikes and a strengthening euro,” ABN Amro said in a note to client. “We think the subdued outlook for underlying inflation points to the ECB taking its time with rate hikes.”
The ECB announces its rate decision at 12.45 GMT, followed by Mr Draghi’s news conference at 1330 GMT.
Fears about currency swings appear justified after U.S. Treasury Secretary Steven Mnuchin argued for a weak dollar on Wednesday.
“Obviously a weaker dollar is good for us as it relates to trade and opportunities,” Mr Mnuchin said in the Swiss ski resort of Davos.
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Read more:
Gold nears four-month highs after hawkish ECB boosts euro
Sterling soars to highest level since Brexit vote
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While the euro’s gain so far has only a modest impact on inflation, the worry is that weaker economies on the bloc’s periphery would be affected by it more, a risk to an economic convergence process that restarted only recently.
Part of his holding pattern approach, Mr Draghi is also likely to keep the bank’s guidance unchanged, maintaining a promise to continue asset buys until a sustained rebound in inflation, even though work to revise the text could begin on Thursday.
Policymakers argued in the December policy meeting that the guidance should be revised in “early” 2018, removing from the text a singular focus on asset buys and raising the role of interest rates in policy accommodation.
“We expect changes in the forward guidance in March and June, to prepare the markets for the end of quantitative easing from October,” Daniele Antonucci at Morgan Stanley said.
“We see the first 15 basis point deposit rate hike to minus 0.25 per cent in March 2019, with a signal from the central bank toward the end of this year,” Ms Antonucci added.
But even a normally cautious Mr Draghi will be unlikely to shoot down market expectations for the ECB to end bond purchases after the scheme, already extended several times, runs out in September.
Growth projections, revised up repeatedly, already look too pessimistic as manufacturing, trade and jobs data all point to superb run for the euro zone economy.
The bloc is about to run out of spare capacity and more hawkish policymakers are already arguing that the ECB was at risk of falling behind the curve in clawing back stimulus for an economy enjoying a five-year growth run.
“The euro area economy is blowing consensus forecasts out of the water,” JP Morgan economist Greg Fuzesi said. “While it is by now widely recognised that euro area growth is strong, the extent of this is still being hugely underappreciated.”
Film: Raid
Dir: Rajkumar Gupta
Starring: Ajay Devgn, Ileana D'cruz and Saurabh Shukla
Verdict: Three stars
The biog
Name: Ayisha Abdulrahman Gareb
Age: 57
From: Kalba
Occupation: Mukrema, though she washes bodies without charge
Favourite things to do: Visiting patients at the hospital and give them the support they need.
Role model: Sheikha Fatima bint Mubarak, Chairwoman of the General Women's Union, Supreme Chairwoman of the Family Development Foundation and President of the Supreme Council for Motherhood and Childhood.
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
The%20specs
%3Cp%3E%3Cstrong%3EEngine%3A%20%3C%2Fstrong%3E2.0-litre%204-cyl%20turbo%3Cbr%3E%3Cstrong%3EPower%3A%20%3C%2Fstrong%3E190hp%20at%205%2C600rpm%3Cbr%3E%3Cstrong%3ETorque%3A%20%3C%2Fstrong%3E320Nm%20at%201%2C500-4%2C000rpm%3Cbr%3E%3Cstrong%3ETransmission%3A%20%3C%2Fstrong%3E7-speed%20dual-clutch%20auto%3Cbr%3E%3Cstrong%3EFuel%20consumption%3A%20%3C%2Fstrong%3E10.9L%2F100km%3Cbr%3E%3Cstrong%3EPrice%3A%20%3C%2Fstrong%3EFrom%20Dh119%2C900%3Cbr%3E%3Cstrong%3EOn%20sale%3A%20%3C%2Fstrong%3ENow%3C%2Fp%3E%0A
A list of the animal rescue organisations in the UAE
The rules on fostering in the UAE
A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years old
- not have been convicted of offences or crimes involving moral turpitude
- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
How does ToTok work?
The calling app is available to download on Google Play and Apple App Store
To successfully install ToTok, users are asked to enter their phone number and then create a nickname.
The app then gives users the option add their existing phone contacts, allowing them to immediately contact people also using the application by video or voice call or via message.
Users can also invite other contacts to download ToTok to allow them to make contact through the app.
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
The more serious side of specialty coffee
While the taste of beans and freshness of roast is paramount to the specialty coffee scene, so is sustainability and workers’ rights.
The bulk of genuine specialty coffee companies aim to improve on these elements in every stage of production via direct relationships with farmers. For instance, Mokha 1450 on Al Wasl Road strives to work predominantly with women-owned and -operated coffee organisations, including female farmers in the Sabree mountains of Yemen.
Because, as the boutique’s owner, Garfield Kerr, points out: “women represent over 90 per cent of the coffee value chain, but are woefully underrepresented in less than 10 per cent of ownership and management throughout the global coffee industry.”
One of the UAE’s largest suppliers of green (meaning not-yet-roasted) beans, Raw Coffee, is a founding member of the Partnership of Gender Equity, which aims to empower female coffee farmers and harvesters.
Also, globally, many companies have found the perfect way to recycle old coffee grounds: they create the perfect fertile soil in which to grow mushrooms.
RACECARD
6pm: Al Maktoum Challenge Round-1 – Group 1 (PA) $50,000 (Dirt) 1,600m
6.35pm: Festival City Stakes – Conditions (TB) $60,000 (D) 1,200m
7.10pm: Dubai Racing Club Classic – Listed (TB) $100,000 (Turf) 2,410m
7.45pm: Jumeirah Classic Trial – Conditions (TB) $150,000 (T) 1,400m
8.20pm: Al Maktoum Challenge Round-1 – Group 2 (TB) $250,000 (D) 1,600m
8.55pm: Cape Verdi – Group 2 (TB) $180,000 (T) 1,600m
9.30pm: Dubai Dash – Listed (TB) $100,000 (T) 1,000m
'Spies in Disguise'
Director: Nick Bruno and Troy Quane
Stars: Will Smith, Tom Holland, Karen Gillan and Roshida Jones
Rating: 4 out of 5 stars
Company%20Profile
%3Cp%3E%3Cstrong%3EName%3A%3C%2Fstrong%3E%20Ovasave%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%20November%202022%3Cbr%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Majd%20Abu%20Zant%20and%20Torkia%20Mahloul%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20Abu%20Dhabi%3Cbr%3E%3Cstrong%3ESector%3A%3C%2Fstrong%3E%20Healthtech%3Cbr%3E%3Cstrong%3ENumber%20of%20staff%3A%3C%2Fstrong%3E%20Three%20employees%3Cbr%3E%3Cstrong%3EInvestment%20stage%3A%3C%2Fstrong%3E%20Pre-seed%3Cbr%3E%3Cstrong%3EInvestment%3A%3C%2Fstrong%3E%20%24400%2C000%3C%2Fp%3E%0A
Result
6.30pm: Al Maktoum Challenge Round-3 – Group 1 (PA) $65,000 (Dirt) 2,000m; Winner: Brraq, Ryan Curatolo (jockey), Jean-Claude Pecout (trainer)
7.05pm: Handicap (TB) $65,000 (Turf) 1,800m; Winner: Bright Melody, James Doyle, Charlie Appleby
7.40pm: Meydan Classic – Listed (TB) $88,000 (T) 1,600m; Winner: Naval Crown, Mickael Barzalona, Charlie Appleby
8.15pm: Nad Al Sheba Trophy – Group 3 (TB) $195,000 (T) 2,810m; Winner: Volcanic Sky, Frankie Dettori, Saeed bin Suroor
8.50pm: Dubai Millennium Stakes – Group 3 (TB) $130,000 (T) 2,000m; Winner: Star Safari, William Buick, Charlie Appleby
9.25pm: Meydan Challenge – Listed Handicap (TB) $88,000 (T) 1,400m; Winner: Zainhom, Dane O’Neill, Musabah Al Muhairi
Look%20Both%20Ways
%3Cp%3EDirector%3A%20Wanuri%20Kahiu%3Cbr%3EStars%3A%20Lili%20Reinhart%2C%20Danny%20Ramirez%2C%20David%20Corenswet%2C%20Luke%20Wilson%2C%20Nia%20Long%3Cbr%3ERating%3A%203%2F5%3Cbr%3E%3C%2Fp%3E%0A
