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Artikel zu Schlagwort: EZB
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Gerhard Winzer am 02nd November 2015

Janet Yellen: Inflation Fighter

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The US central bank Fed hinted at an increase of the Fed funds rate in December at its meeting on 28 October. A bias towards such an increase is referred to as tightening bias.

If the economic data permit it, the Fed will increase the Fed funds rate from practically zero percent. The extent and the speed of the increases will remain low. On a global scale, we can see deflation pressure (pressure for prices and wages to fall). The strong US dollar already has a negative impact on the US economy, the financial markets are still unstable, and the so-called natural interest rate, which comes with full employment and stable and low inflation, has fallen clearly in the past years. The outlook for the risky segments of the financial market remains positive in the short run, but uncertain in the medium term.

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Sevda Sarp am 24th April 2015

Strong Dollar and Turkey

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In Turkey, the impact of the currency fluctuations are being discussed and even an ordinary Turk on the street knows what it means for the currency to depreciate. For example, during a cab ride, you may have a very deep economic discussion with the taxi driver about the dollar and the Turkish lira. This is as a result of the crises Turks experienced in the past – unfortunately there was more than one! This in turn, has enabled Turks to have their guard up automatically to cope with the strong dollar and there is a dollar investment mechanism in every household immediately if they get a whiff of the depreciating Turkish lira. Corporates also got used to foreign currency fluctuations, but as an import and export oriented country, the depreciating lira has some negative implications on the corporates as well as economic indicators.

After quite a stable period the Turkish lira has started depreciating against the dollar since the final months of 2014 due to a combination of: i) President Recep Tayyip Erdogan’s comments regarding the Central Bank of Turkey, ii) the ECB’s quantitative easing program, iii) woes about Greece’s exit from the EU and iv) the FED’s rate hike expectations.

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