Simply Economics

The unknown outcome of the US election may be increasing the risk that new fiscal stimulus will either be limited or delayed. Our panel also discusses the Reserve Bank of Australia's move this week to cut interest rates and whether it may be anticipating increasing stimulus, perhaps negative rates, from other central banks including the European Central Bank and Bank of England both of which are facing a rising tide of Covid infections.

Financial markets, including currencies, are showing no dislocations despite surging global debt and aggressively stimulative monetary policy. And even more aggressive policy may in store amid the possibility that the general weakness of the economic recovery will force yet more central banks to adopt negative policy rates.

What to expect or not to expect from the EU leaders' summit is this week's feature, one that poses possible and immediate risks to UK assets. Jeremy Hawkins and Mark Pender also discuss worldwide debt, worldwide disinflation, Greek bonds and global growth forecasts.

Relaxation of Covid restrictions is giving much of Asia an economic lift, while lack of new restrictions is a plus for the US. Yet in Europe infections are on the rise at the same time that inflation is moving in the wrong direction, both pressuring the European Central Bank to perhaps increase QE. For all regions, new fiscal stimulus, delayed or not, is the universal cry.

Reflecting the strains of Covid in Europe, splits may be showing at both the European Central Bank, where calls are appearing for greater QE, as well as the Bank of England where talk of negative rates has re-emerged. Jeremy Hawkins and Mark Pender also update the outlook for fiscal stimulus both in Europe and the US, and also discuss the possible market impact of US politics and the first presidential debate.

How to control the pandemic while not limiting the economic recovery is the question for policy makers in Europe where talk of a second wave is building. Jeremy Hawkins and Mark Pender discuss the general outlook for fiscal stimulus as well as September's run of PMIs and what to expect from the coming Swiss National Bank assessment.

Inflation is the first topic of discussion among many European central-bank policy makers, in distinct contrast to the US where the labor market is top on the agenda. The relative role that currency plays in policy making is also discussed, as are the latest developments over Brexit (specifically the UK’s Internal Market Bill).

New stimulus from the European Central Bank on Thursday isn't likely but, given economic slowing and rising Covid rates, is possible. Uncertainty over passage of July's European recovery package is another risk our panelists discuss as well as new uncertainty over Brexit as the UK toughens its stance.

Our panelists update economic activity in Asia, North America, and Europe with the general assessment that the recovery may, on net, be unfolding somewhat slower than expected. Also addressed is the Federal Reserve's move to embrace inflation averaging, what it means and whether other major central banks might go down the same route.

How is the sharp bounce back in economic data affecting politics, including the pending election in the US? Jeremy Hawkins and Mark Pender also tackle questions surrounding the general weakness in production versus strength in retail sales and home sales.