Saturday, December 16 2017 | ASIA TODAY INTERNATIONAL - Reporting the Business that Matters in Asia
Updated: 6 hours 13 min ago
The net effect of the proposed tax changes on house prices will be limited. Doubling the standard deduction will increase the incentives to rent. The lower cap on mortgage interest deduction can lower prices of homes in higher price ranges over time. Other tax proposals will tighten housing market conditions and generate upward pressures on home prices.
Highlights: EBA published impacts of the finalisation of Basel III framework for European banks. The Council approved EU's legislative priorities for 2018-2019. International standard-setting bodies launched surveys on incentives to centrally clear OTC derivatives trades. Finally, the ESAs published standards on money laundering and terrorist financing risks.
There was no discussion on any change in the QE recalibration. The ECB seems more confident on the economic expansion. Significant upward revision of staff’s growth forecasts.
The CBRT hiked the recent de-facto policy rate (late liquidity window, LLW) by only 50bps to 12.75%, disappointing the market call between 75-100bps and our call of 125bps in the average funding rate. The incoming inflation data will be the key input to know whether the CBRT opted today for a gradualist approach or just a wait-and-see attitude.
Financial dollarization exposes countries to shocks which can trigger severe financial and economic problems. This note describes a few successful country experiences of de-dollarization. A key lesson is that macroeconomic stability and particularly price stability and low inflation is a pre-condition for starting a successful de-dollarization process.
November economic indicators reported today were generally below the previous readings. Meanwhile, the credit figures kept at a relatively high level as the authorities want to maintain market liquidity toward end-year. As anticipated, the economy continued its moderation in Q4 due to the authorities’ policy initiatives.
FOMC: Passing the Baton for Final Phase of Normalization
In this issue we will focus on: Digital markets: challenges for competition policy; Initial Coin Offerings (ICOs) ): investment in crypto tokens: fad, madness or vision?; Towards a new digital identity: identification systems and digital environment; Fintech: implications for regulation and supervision; and Artificial Intelligence: a Policy Approach.
In October 2017, the balance of the current credit granted by commercial banks to the private sector grew at a nominal annual rate of 12.5% (5.8% real), 0.3 percentage points higher than the rate observed the previous month (12.3%) but 2.9 percentage points below that registered in October 2016 (15.4%)
The GDP growth rate of 3Q17 surprised on the upside at 11.1% (8.5% both BBVA-GB and consensus), which was supported by the Government’s counter-cyclical measures, favorable base year impact and working day adjustments. This strong figure and an already promising 4Q17 nowcast will lead us to significantly upgrade our already high GDP forecast (6%) to near 7% for 2017.
The economy of Navarre grew by 2.9% in 2016. It will grow by 3.0% in 2017 and by 2.8% in 2018. This will add some 8,000 new jobs between 3Q17 and the end of 2018; unemployment shall drop to 8.8% by then. Although pre-crisis GDP per capita will be recovered this year, creating more and better jobs remains a challenge.
Nobody will have failed to notice that Europe’s economy is responding better than many had thought a little over a year ago, when there was not much faith in the sustainability of growth. Moreover, the outcome of the Brexit referendum and the problematical election schedule had increased the risks looking ahead into 2017.
Weekly economic update focusing on the major economic indicators to be released the week of December 11, 2017. Special topic: November employment report
Monetary Policy should not react to temporary supply shocks. In a close call (70-30 odds) we expect Banxico to hold rates steady at next week’s policy meeting. A hawkish pause is enough for the time being
Highlights: GHOS announce agreement on outstanding elements of Basel III. BCBS publishes cumulative quantitative impact study on reviewed Basel III and discussion paper on regulatory treatment of sovereign exposures. ESAs publish list of identified financial conglomerates and SRB publishes its 2018 work plan. Bank of Spain approves new accounting rule for credit entities.