Inflation data suggest ECB will move slowly on rates
The euro zone’s latest inflation numbers, published this week, were slightly stickier than expected with headline price growth stuck at 2.4% for April and core inflation (at 2.7%) coming down more slowly than analysts had forecast.
The headline figure was flat because food inflation accelerated from 2.6% to 2.8%, while energy prices dropped more slowly than expected, from -1.8% to -0.6% compared to April last year.
While the outlook for prices is still positive, in that the euro zone remains on a disinflationary path, the latest numbers serve as a warning that the European Central Bank (ECB), when it finally starts reducing interest rates, is likely to move slowly and will – according to Dutch bank ING – “take its time in normalising rates”.
Ironically stronger-than-expected growth numbers for EU economies represent an upside risk for inflation. With real wages rising and labour markets still strong, Frankfurt policymakers will, however, feel they have time on their side.
The more cautious outlook on rates was reflected in Bank of Ireland’s latest trading update. The lender said it now expects its full-year net interest income to decline by only 3-4 per cent compared to its previous forecast for a 5-6 per cent drop.
The bank had previously assumed the ECB would cut its key deposit rate from 4 per cent to 2.75 per cent by the end of the year. It now expects rates across the euro zone, the UK and the US to be a quarter of a percentage point higher than previously forecast at the end of the year.
The ECB’s expected pivot in monetary policy in June is still on the cards but mortgage holders won’t have much to celebrate.
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Grants for the purchase of electric vehicles (EVs) should be extended to used EVs in a bid to accelerate the shift away from petrol and diesel cars, Big Four accounting firm PwC has proposed in its pre-budget submission.
AIB’s share of new mortgage lending crept higher in the first few months of this year, leaving the State's top two banks with more than 75 per cent of the market. In a trading statement, AIB said its net interest income rose 27% so far this year as it benefits from the succession of European Central Bank rate increases in the 15 months to last September.
The Government faces pressure from the GAA to amend its proposed gambling law which director general Tom Ryan warns will hit clubs’ fundraising efforts. According to a letter from Mr Ryan to county organisations, the GAA views the only planned change to a proposed advertising ban as “insufficient and unworkable” for clubs’ efforts to raise money.
World of Work
Sleep and rest are not the same
Have we been getting it all wrong about sleep? Are the recommended eight hours not the panacea we thought they were and is there another way to fight the fatigue that has become a permanent fixture in so many people’s lives? The short answer is yes, mainly because we’ve been confusing sleep with rest and they’re not the same thing.
Saundra Dalton-Smith is a medical physician and expert on workplace wellbeing and burnout prevention. She says that by erroneously combining the concepts of sleep and rest, “we have dumbed down rest to the point where it appears ineffective”.
Dalton-Smith adds that while high-quality sleep is important, it’s a mistake to confuse it with rest. Very often what tired people need is more rest, not more sleep. This also explains why those who get a decent amount of shut-eye, and don’t have an underlying illness or medical condition, can still end up feeling chronically tired.
In Other News
Refugee payments up for discussion as Dublin tent camp is dismantled
Ministers are set to consider a further cut in payments to Ukrainian refugees and will meet today to discuss the Government’s communication plan after a tented encampment for asylum seekers in Mount Street was removed on Wednesday.
Some 285 single men were offered accommodation: 186 at Citywest Hotel and a further 99 at Crooksling in southwest Dublin. However, at least 30 men who previously slept in tents pitched outside the International Protection Office were without accommodation last night.
Debate about the best way to manage migration comes amid continuing tension between the British and Irish governments around the issue of returning asylum seekers who arrive into Ireland over the land border.
Thursday’s most read
Inside Business podcast
Shares in Apple have fallen over 8% this year, wiping about €300 billion off its market value as it battles declining sales in China, regulatory scrutiny of its app store, and mounting concerns that the company has lost its edge on innovation, especially in the field of AI. But is Apple’s recent decline likely to continue in the longer term? Inside Business podcast host, Ciarán Hancock gets a range of perspectives on the issues affecting Apple and its prospects.
Listen to Inside Business: Has Apple Inc run out of ideas?
Highlights this week
- World of Work: In the post-pandemic world with its tendency for side hustles, multi-faceted jobs and blurred lines between work and home lives, former England cricket captain Mike Brearley, now a psychoanalyst, argues we each have a team of internal players, who we need to coach so we can use all their skills for tip-top performance – and find balance between them for a happy existence.
- Personal Finance: Inheritance is good news for most people but it can cause a lot of stress - and loss of entitlement - for those who are on means tested welfare payments. If you are planning on leaving something to a person in that position, Dominic Coyle advises that it pays to think ahead.
- Commercial Property: Building materials giant CRH is selling a 65 hectare (161 acre) site at Fassaroe on the Dublin-Wicklow border adjacent to the M11 motorway and close to the M50 that could accommodate up to 1,700 homes in a move that is likely to attract large national and international investors and developers and command a price of around €25 million.
- Technology: Karlin Lillington takes issue with Google complaining about and firing employees who bring "politics" into work when the company is one of the biggest political lobbyists worldwide and is involved in all sorts of business contracts that could be seen as "political".
One to Watch
Just a day after Minister Éamon Ryan published The Future Framework for Offshore Renewable Energy, setting out a policy pathway for Ireland to deliver 20GW of offshore wind by 2040 - more than three times the total electricity volumes currently generated in the State - through the use of fixed turbines off the south and east coasts, Wind Energy Ireland hosts a two-day offshore wind conference today and tomorrow in Dublin. It will be attended by industry leaders and policymakers.
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