Coppola Comment

My latest post at Forbes considers what the ECB's alternatives are for easing in the Eurozone: The ECB is not going to do QE, or indeed any other form of monetary easing at the moment. But they are  talking about it . And for the moment, it seems, talk is enough. The Euro is up and bond yields are down, even for Greece (which is bravely attempting  to return to the capital markets this week). European stock markets are  worrying about the Ukraine crisis.  It’s back to business as usual. But as Andrew Clare of Cass Business School  caustically remarks , “markets won’t be satisfied forever with hot air”. Unless Euro area inflation somehow reverses its current downward trend – which seems unlikely, since the world is on a  general disinflationary trend  at the moment and the Euro area is hardly a stellar performer  – the ECB will eventually be forced to do more than talk. Read on here . UPDATE: The ratings agency Fitch is rather more positiv...

The UK's Funding for Lending scheme is being changed. The Bank of England and HM Treasury have announced that in future, funding obtained through the FLS may only be used to support business lending, not residential mortgages. And to encourage bank lending to businesses even more, the fees for FLS collateral enhancement are being cut. There has been much talk of a housing bubble in the UK. Personally I am unconvinced, but there is no doubt that the residential property market is stronger than it was. And more broadly, consumer credit is increasing. Up till now the FLS has not distinguished between categories of lending: it could be used to support any lending, although it was hoped that it would particularly be used for business lending. The Governor of the Bank of England argues that broad support for consumer credit is no longer needed, and that the FLS should now be restricted to business lending. I don't disagree. In fact I think the FLS should have been restricted to b...