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The Hellenic Managing Authority of European Territorial Cooperation Programmes is organizing the "2nd European Territorial Cooperation Conference: Launching the Programming Period 2014-2020 – The Challenge of Synergies".


The conference will take place on 22nd & 23rd June 2015 in Thessaloniki, Greece (Venue: Makedonia Palace Hotel).

This event will be the official launch of the INTERREG Programming Period 2014-2020. The goal of the Conference is to present the Programmes Greece is managing (Greece-Bulgaria, Greece-Cyprus, Greece-Italy, Greece-Albania, Greece-the Former Yugoslav Republic of Macedonia, Balkan-Mediterranean) as well as the Programmes Greece is participating in, to seek synergies and common ground for capitalization and to pave the way for the 1st Calls for Proposals.

Along with the conference a Projects Fair, highlighting the Strategic Projects implemented during the 2007-2013 Programming Period will be organized.

You may register by clicking here

Draft Agenda

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Central Bank of The Republic of Turkey


By Emre Peker

Turkey’s central bank faces an uphill battle in the final quarter of 2014, pressured by the government to stoke economic growth with looser credit just as markets demand a tighter stance against stubbornly high inflation.

The competing agendas were evident in the central bank’s Sept. 25 decision. Policymakers held all its interest rates steady for the first time since March, yet softened their emphasis on inflationary risks.

With annual inflation jumping to 9.54% in August and yearend expectations anchored at 9%, almost double the 5% official target, economists have been warning Gov. Erdem Basci against eroding the central bank’s credibility with rate cuts.

“Despite the challenging external and domestic backdrop, we believe that the central bank of Turkey will look for opportunities to ease if the lira and global conditions permit,” said Ilker Domac and Gultekin Isiklar, Citibank economists in Istanbul. “We remain skeptical about this approach.”

Since May, Mr. Basci has cut the central bank’s benchmark interest rate to 8.25%, despite rising inflation.

The government has nonetheless slammed policymakers for not easing quickly enough as growth sputtered to 2.1% in the second quarter on an annualized basis from 4.7% in the first quarter.

With the U.S. Federal Reserve mulling rate increases in 2015 and emerging markets bracing for selloffs, Turkey’s central bank will have to balance government demands to boost growth while trying to convince investors about its commitment to slow inflation.

Investors doubt the central bank can pull it off, and have driven Turkey’s lira to an eight-month low against the dollar, threatening to fuel faster price increases.

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South African Reserve Bank


Patrick McGroarty

The big question surrounding the South African Reserve Bank isn’t whether interest rates will rise but who will raise them.

Governor Gill Marcus surprised investors in September when she said she wouldn’t seek a second five-year term at the head of the bank. She didn’t give a reason and said she knew the bank would be in good hands.

Economists say President Jacob Zuma will likely hand the top job to one of the bank’s current deputies, Daniel Mminele or Lesetja Kganyago. Both are respected bankers who would likely continue the pragmatic, conservative approach to rate setting that Ms. Marcus embraced while she steered the bank through an exceptionally turbulent time for South Africa’s economy.

Her successor will confront the same opposing—and complicating–forces of high inflation and slow economic growth that often tie policymakers’ hands.

Following many of her emerging-market peers looking to protect themselves from the effects of the end of the Fed’s bond-buying spree, she raised the bank’s key rate by a half percentage point in January to 5.5%. Though she pledged to make that hike the beginning of a trend, she managed just one more increase in July to 5.75%.

When South Africa’s new central bank governor announces his or her first rate decision in November, it is likely to come after a mission statement that hews closely to Ms. Marcus’s rising-rates vision. But the new governor might also have to defer a rate increase if growth doesn’t pick up from the abysmal 1.5% annual expansion that Ms. Marcus says the economy is likely to post this year.

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Sweden’s Riksbank


By Charles Duxbury

Sweden’s central bank heads into the fourth quarter facing a continued challenge to push up inflation which has been stuck around zero for much of this year.

The Riksbank has an inflation target of 2% and has over recent months made clear that meeting this target is its priority. In doing so it has signaled that concerns over rising Swedish household debt are now secondary and are something for lawmakers to deal with.

The bank’s central forecast signals an unchanged main interest rate until late 2015, when it will be gradually raised. However, the minutes of its most recent policy meeting made clear the executive board will cut its main rate from its current record low of 0.25% if its needs to.

One of the six rate-setting board members, Karolina Ekholm, said that as inflation is so low “there are still reasons for attaching a higher probability to a repo-rate cut than a repo-rate increase in the near term.”

Her colleague Martin Floden said it may be necessary to make monetary policy more expansionary, by cutting the repo rate or postponing the first increase, if new information comes in that leads to a lower forecast for inflation in the short and medium term.

Both board members said if inflation looked to be rising faster than expected they would be in no hurry to raise rates, not least because inflation has been so low for so long.

This focus on boosting inflation–rather than worrying about overshooting the inflation target–was something they termed an “asymmetrical” approach to policy.

The term has been seized on by analysts here as a theme for the months ahead.

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Swiss National Bank


By Neil MacLucas

The third anniversary of the Swiss central bank’s imposition of zero interest rates and a ceiling for the Swiss franc’s value against the euro has passed, with no sign of change in the foreseeable future.

That doesn’t mean calm waters ahead. Swiss central bankers will keep close watch on developments at the European Central Bank, whose aggressive easing policies have weakened the euro, and on a frothy Swiss housing market.

The Swiss National Bank has kept policy on hold for 13-straight quarters, scotching speculation it would follow the ECB in resorting to negative interest rates to stem investor demand for the franc, perceived as a haven in times of global tension.

Since mid-September 2011, the main focus of the SNB has been defending its 1.20 franc-per-euro exchange rate cap—meaning the franc can’t strengthen beyond that level. And with the franc gaining in recent weeks due to tensions in Ukraine, it has little room to maneuver.

SNB President Thomas Jordan said the central bank hadn’t intervened in the currency market in September, reflecting the high degree of credibility its intervention threat has in markets. Still, Mr. Jordan wouldn’t rule out the use of negative interest rates to curb demand for the Swiss currency if necessary.

Moreover economists noted the wording of September’s policy meeting was more dovish than expected, with policy makers cutting this year’s economic growth forecast to 1.5%, from 2%.

The SNB also has concerns about the Swiss property market boom, which is being partly fueled by ultra-low mortgage rates, and although there are signs of a slowdown in mortgage lending, it sees little evidence of an easing in the imbalances that have built up in the real estate market in recent years.

Since it cannot increase rates for fear of boosting the franc, it will probably stick to its verbal warnings on the dangers of the housing market overheating.

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Bank of Thailand


By Nopparat Chaichalearmmongkol

Thailand’s central bank maintained its easy money policy during the July through September period– the first full quarter since the military seized power on May 22 and began launching measures to jumpstart the economy.

The military government has been credited with restoring stability after months of political gridlock and unlocking fiscal spending. Consumer confidence has risen, as have private consumption and investment. Meanwhile, the economy grew 0.4% on-year in the second quarter, the tail end of which was when the military was in charge, after shrinking in the first quarter 0.6% from a year earlier and 2.1% from the prior quarter.

The Bank of Thailand has kept its benchmark interest steady since March, when it cut it by a quarter percentage point to 2%– before the coup.

“From our assessment, the current rate should be lending sufficient help to the economic recovery,” said Prasarn Trairatvorakul, the Bank of Thailand governor.  “If the situation calls for a rate adjustment, we will do so.  But the economic outlook now tells us things are recovering, so there is no need for us to change our monetary policy stance right now.”

Economists expect the central bank will keep the rate where it is for at least another quarter.

“The need for monetary policy to pick up the fiscal slack has been reduced with the junta placing the economy on the front burner,” said Weiwen Ng, an economist at ANZ Research. “Furthermore, household debt remains elevated and could constrain the scope of monetary policy easing.”

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Bank of Mexico


By Anthony Harrup

The Bank of Mexico is widely expected to stay on hold in the fourth quarter as it did in third, having already cut its benchmark interest rate to a record low 3% to address sluggish economic growth.

Since June’s surprise rate cut, the central bank led by Agustín Carstens has become less breezy about inflation, and a bit more upbeat about growth.

The economy picked up pace in the second quarter, growing at an annualized rate of 4.2% from the first quarter and beating the central bank’s estimate, while consumer price inflation has accelerated to 4.2% as of mid-September, above the bank’s 2%-4% comfort zone.

In July, the central bank was still expecting inflation to approach its 3% target in January of 2015, but by September it had hedged the forecast to say in the first half of next year. Board members also expressed concern about recent opposition proposals to raise the country’s minimum wage, which is the lowest among the Organization of Economic Cooperation and Development.

“The minutes of Banxico’s September 5 meeting confirmed a shift to a slightly more restrictive tone by policy makers and highlighted some discrete risks to the inflation outlook, such as the debate on raising the minimum wage,” Citi said in a report. “We reiterate our view of the next rate move being up, but not until mid-2015.”

Many observers expect the Bank of Mexico will wait until the U.S. Federal Reserve starts to raise rates before following suit, a view which gained traction as the minutes of the latest meeting showed board members concerned with the impact the Fed moves could have on the exchange rate and inflation.

“This has always been the case, but to the extent that we are now closer to the end of zero rates in the US, Banxico’s board is increasingly concerned,” said Nomura.

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Reserve Bank of New Zealand


By Rebecca Howard

After four consecutive interest-rate increases this year, New Zealand’s central bank kept rates on hold in September to deal with a double-blow from tumbling export prices and a stubbornly high local currency.

New Zealand’s agriculture-focused economy has been supported in recent years by surging demand from Asia’s rising middle classes for its dairy exports, and by a construction boom following a series of devastating earthquakes.

As a result, the economy outperformed many of its peers, with growth currently at a 10-year high. The Kiwi central bank was among the first in the developed world to raise interest rates since the global recession, lifting them by one percentage point this year to 3.50%.

Global dairy prices, however, are down more 45% since a peak in February and that–coupled with weaker forestry export prices, moderate inflation and the still-high Kiwi dollar–led the central bank to pause.

Still, while inflation remains moderate, the reserve bank sees dangers on the horizon. It hasn’t finished raising rates, and has said future credit tightening will be needed to keep average inflation near the mid-point of its 1%-to-3% target band.

One of the main drivers of inflation will continue to be rising immigration, with record numbers of migrants buying homes and boosting spending in the economy. House-price inflation remains a concern, but has slowed on the back of the higher interest rates and new tools aimed at curbing lending.

The bank has said it’s keeping a watchful eye on both the housing market and the exchange rate. The New Zealand dollar has lost ground recently–it’s currently about 8.7% lower than this year’s peak in July, but remains historically high and a drag on growth, the central bank has said.

Many economists are expecting the next rate increase to come sometime between March and June next year.

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Norway’s Central Bank


By Charles Duxbury

Norway’s central bank took investors by surprise in September with a hawkish policy statement, but it may have to tone that message down if the country’s currency, the krone, continues to strengthen this autumn.

The Norwegian currency jumped against the euro Sep. 18 after Norges Bank removed the chance of an interest-rate cut from its short-term forecasts following a steady rise in inflation in the oil-rich nation.

The bank left its benchmark interest rate unchanged at 1.5% but removed a sentence it had included in a June statement about needing to cut borrowing costs if the economy were to struggle.

The Norwegian economy is one of Europe’s strongest, underpinned by oil and gas wealth. The mainland economy grew 1.2% in the second quarter, far outstripping the eurozone and its Nordic neighbors. The outlook for the economy isn’t the worry for Norges Bank that it appeared to be earlier this year.

A stronger currency could be a concern, though, as it could reduce inflation via lower prices for imports.

The Norwegian krone strengthened more than 1% against the euro after the latest interest rate announcement and could continue higher against the euro, analysts said.

The central bank hasn’t moved its benchmark interest rate in more than two years.

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National Bank of Poland


By Patryk Wasilewski

Following a 14-month break, Poland’s central bank is set to restart its credit-easing campaign in the fourth quarter to support the country’s weak recovery and boost inflation.

The central bank’s governor Marek Belka in September opened the door to a cut in the country’s 2.5% benchmark interest rate in October, and recent comments by his fellow rate setters suggest a broad consensus in favor of further easing is being formed.

For the first time on record, consumer prices fell in the 12 months to July and analysts expect prices to keep dropping until November.

The 10-members of the central bank’s rate-setting panel had hoped to see deflation reversed by an accelerating recovery, but the growth has nearly stalled. The economy expanded 1.1% in the first quarter and just 0.6% in the second, weighed down by a Russian embargo on food imports, weaker growth in the European Union and increased uncertainty due to Ukraine’s conflict with Russia.

With rate cuts nearly certain, the market’s focus is now on the pace and scale of the easing campaign about to start in October. Some analysts believe the central bank’s rate-setting panel will deliver a bigger cut than its traditional quarter-percentage-point move.

Economists estimate the central bank will cut rates by cumulative total of a half to a full percentage point over coming months, depending on pace of economic recovery.

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Bank of Russia


By Andrey Ostroukh

After raising interest rates three times since the beginning of the year, the Bank of Russia is caught between a rock and a hard place as it aims to tame stubbornly-high inflation without putting additional pressure on flagging economic growth.

The Russian central bank was forced to raise rates in March when Moscow indicated it intended to annex the Ukrainian region of Crimea. The central bank’s emergency move, designed to prop up the plummeting ruble, was then accompanied by further rate hikes as the inflation rate continued to rise.

In September, the Bank of Russia left its key rates unchanged but said it stood ready to tighten the monetary policy further should inflation accelerates again from levels of around 7.5%, which is above the 2014 inflation ceiling of 6.5% set by the central bank.

The inflation rate was boosted this year by Moscow’s decision to retaliate against sanctions imposed by the U.S. and the European Union. In August, Russia banned food imports from countries that sanctioned Moscow. The move reduced food supplies and is expected to fuel inflation well into 2015.

Despite the sanctions, massive capital outflows and a slowing economy, the central bank is sticking to its plan to switch to an inflation-targeting policy from 2015, which requires a free float of the ruble.


The ruble touched its all-time lows in September but it found no support from the central bank, which last intervened in foreign exchange markets in May. The central bank has recently expanded the ruble’s trading band, and says it reserves the right to intervene by selling foreign currencies if necessary for the country’s financial stability.


The central bank will meet on rates again on October 31 when it is expected either to hold rates if inflation does not rise, or tighten policy marginally to signal its commitment to rein in consumer price increases.

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Bank Indonesia


By I Made Sentana

Bank Indonesia maintained high interest rates in the third quarter to help rein in the Southeast Asian nation’s current-account deficit, a broad measure of its trade balance. Because inflation has eased, it is not under pressure to boost borrowing costs for now.

The central bank has left its benchmark BI interest rate unchanged this year 7.5%.

The current-account gap—the amount by which its imports of goods and services exceed its exports—more than doubled to US$9.1 billion (4.3% of gross domestic product) in this year’s second quarter from US$4.2 billion (2.1% of GDP) in the first quarter.

Inflation has declined to 3.99% in August from 8.79% a year earlier, as the economy adjusted to last year’s fuel price increase.

The central bank has refrained from raising interest rates because economic growth slowed to 5.12% in the second quarter, its weakest pace in five years, from 5.21% in the January-March period.

Bank Indonesia could face mounting pressures to increase interest rates if inflation rises. President-elect Joko Widodo has indicated he may raise subsidized fuel prices to try to reduce the subsidy’s impact on the government’s budget. His advisers say they are proposing to increase the price by 3,000 rupiah a liter after Mr.Widodo assumes power Oct. 20.

“If the government increases fuel prices by 3,000 rupiah this year, inflation will accelerate to 9%,” Bank Indonesia Senior Deputy Gov. Mirza Adityaswara said on Sept. 19. That would be above the central bank’s 2014 target for inflation of between 3.5% and 5.5%.

Mr. Adityaswara didn’t say what Bank Indonesia’s response would be, but many economists expect it would lift interest rates if inflation jumps.

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Bank of Korea


By Kwanwoo Jun

Attention in South Korea is focused on whether the central bank will deliver another rate cut before the end of the year to support government efforts to juice economic growth.

The Bank of Korea made its first rate cut in 15 months in August, lowering its policy rate by a quarter percentage point to 2.25%, a move widely seen as supporting a $40 billion economic stimulus package announced by the government a month earlier.

Economists are split over whether the BOK will ease again in the fourth quarter. In September, the government said it would run a wider fiscal deficit next year to boost spending and spur growth.

Some central bank watchers expect the BOK to stand pat for the time being before beginning to raise rates next year in line with the Federal Reserve’s anticipated policy tightening. South Korea’s gross domestic product grew 0.5% on-quarter for the three months to June–slower than 0.9% growth in the first quarter–as consumer spending was hit badly by April’s ferry sinking disaster. Data on third-quarter growth are due in late October.

In July, the BOK trimmed its growth forecast for 2014 to 3.8% from 4%. It expects the economy to expand 4% in 2015. Inflation remains benign.

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Reserve Bank of India


By Gabriele Parussini

India’s economy seems to be on a roll: growth is accelerating, external imbalances are shrinking and the rupee so far looks immune from the pressure weighing on other emerging-market currencies. The Reserve Bank of India will be listening to the crescendo for the only off-key note: inflation.

Much of what Gov. Raghuram Rajan does in the coming months depends on whether consumer price increases slow down enough. Mr. Rajan has kept India’s main interest rate steady at 8% for eight months now.

Mr. Rajan is hearing differing calls. Businessmen and politicians clamor for a rate cut to boost the economy, while the IMF goes so far as to suggest a further rate hike to tame prices. RBI watchers know he won’t loosen policy unless inflation shows clears signs of abating.

And with global headwinds set to rise again soon, the balance Mr. Rajan has achieved looks fragile. The U.S. Federal Reserve is on track to end its bond-buying program in October and is expected to start raising U.S. interest rates next year. Emerging markets could face huge capital outflows as investors take their money back to developed countries. On the other hand, the European Central Bank and the Bank of Japan have taken their interest rates below zero, hoping to stimulate investment and growth, and are unlikely to change direction in the foreseeable future. These cross-currents could give the RBI Governor some breathing space.

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Bank of Israel


By Joshua Mitnick

A dramatic 50-day military clash with Hamas stoked dramatic moves on the Bank of Israel’s monetary policy in the third quarter.

Amid daily barrages of rocket strikes that kept the public at home, the Israeli central bank cut its benchmark lending rate for August and September by a quarter percentage point each month to bring it to 0.25%. Even before the conflict, policymakers worried about sagging growth amid pressure on the country’s all-important export sector.

The central bank said in September it would leave the benchmark rate for October unchanged, and it may decide to follow suit in November and December to see how the economy reacts to having interest rates at an all-time low.

Another challenge for Bank of Israel Governor Karnit Flug: near-zero inflation. Annual consumer price growth was 0.30% in August, well below the 1% lower boundary for the government’s inflation target. Analysts say inflation expectations for the next 12 months have even moved into negative territory, another worrisome sign.

Some analysts say that the bank could decide on another cut to 0.15% before the end of the year — a move that would “test the zero boundary” according to analyst Terrence Klingman of Psagot Investment House Ltd.

Rate cuts translate into a weaker shekel, a development that’s likely to make exports more competitive. Concern about the effect of ultra-low rates on Israel’s surging housing sector has become secondary, say analysts.

Much depends on the U.S. Federal Reserve. “Only after the U.S. starts raising interest rates will the [Israeli] bank raise rates. We expect [Israeli] rates to be unchanged,’’ said Alex Zabezhinsky, chief economist at Meitav Dash Securities.

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Denmark’s Nationalbanken


By Charles Duxbury

The Danish central bank will keep a watchful eye on the European Central Bank in coming months as it seeks to protect the Danish currency’s peg to the euro. It may be forced to intervene in currency markets or even take its deposit rate further into negative territory if upward pressure on the Danish krone becomes too extreme, analysts say.

That’s because of all the European central banks outside the eurozone, Denmark’s is perhaps the most affected by ECB policies. Its sole policy objective is to keep the Danish krone within 2.25% on either side of a level of 7.46038 krone to the euro.

The bank earlier in September cut its deposit rate back below zero, tracking an earlier move by the ECB, to maintain the stability of the Danish currency against the euro. The deposit rate was negative for nearly two years until spring this year as the central bank sought to sap demand for krone assets and weaken the currency.

It was raised back above zero in April.

Nordea bank analyst Jan Storup Nielsen said growing speculation about further stimulus measures by the ECB has intensified an existing trend towards a stronger krone against the euro.


So far, the krone appreciation has not been strong enough to prompt the central bank to intervene in the currency market. If the krone strengthens further, the central bank will most likely start selling its own currency and there is a risk of a further cut to the deposit rate, Mr. Nielsen said.

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Bulgaria’s Central Bank


By Sean Carney

A shakeup is likely at the Bulgarian central bank this autumn after the country endured its worst banking crisis in nearly two decades this summer.

The central bank is responsible for overseeing local financial markets. Its senior figures have faced widespread criticism for lax oversight and for being too close to parties with vested interests in local banks.

The central bank’s governor Ivan Iskrov has offered his resignation but personnel changes will come only after Bulgaria’s parliamentary elections due Oct. 5. The country’s currency, the lev, looks safe from volatility in coming months despite the expected shake up as it is pegged to the euro.

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National Bank of Hungary


By Margit Feher

Having announced in July it was done easing credit, Hungary’s central bank is widely expected to keep its benchmark interest rate unchanged for the rest of the year at an all-time low of 2.1%.

The bank has pledged not to alter the rate this year, since the annual rate of inflation was 0.2% in August and is expected to accelerate closer to the 3.0% target by the end of 2015.

The central bank also wants to support economic growth. Propelled by European Union support funds and increasing car manufacturing output, the economy grew 3.9% in the second quarter from a year earlier. But the central bank expects that to slow to 2.4% next year.

Some analysts say the central bank may be tempted to cut rates later this year if it appears possible to do without weakening the forint.

The prospect of higher interest rates in the U.S. hasn’t yet led to large scale withdrawals of capital from emerging markets such as Hungary, while additional European Central Bank easing may make emerging European investments more attractive.


The ECB’s steps are helping Hungary keep its monetary policy loose “for as long as possible rather than [providing] a new opportunity to continue the easing cycle,” said ING economist Andras Balatoni.

Instead of cutting rates further, which would most likely weaken the Hungarian forint, the central bank may want to let the currency appreciate, Mr. Balatoni added.

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European Central Bank


By Brian Blackstone

The European Central Bank has been the most active of major central banks in recent months with interest-rate cuts, lending programs and private-debt purchase facilities all unveiled since June.

Its divergence from other major central banks–notably the Federal Reserve and Bank of England, which are eyeing tighter policies—will continue during the fourth quarter as the ECB loads its balance sheet with four-year loans to banks as well as asset-backed securities and covered bonds.The result has been a sharp depreciation in the euro’s exchange rate, which should boost annual inflation– just 0.3% through September, far below the ECB’s 2% target–and economic activity via improved exports.

The question that will dominate the rest of the year is: has the ECB done enough?

RBS economist Richard Barwell is eyeing three signposts: “is the euro lower; will the (four-year ECB loan) take-up be higher in December than in September and are inflation expectations lower?”

If these break the ECB’s way—meaning a lower exchange rate, strong demand for ECB loans and stable inflation expectations—then its work is largely done. If they don’t, look for debate to intensify over whether to launch large-scale government bond purchases.

The exchange rate is a dicey issue for the ECB. The central bank doesn’t target it, ECB President Mario Draghi repeatedly says. But officials have, though actions and words, engineered a sizeable drop since May, when it was nearly $1.40 against the U.S. dollar. It was $1.26 at the end of September.

Bank of France Governor Christian Noyer put it bluntly on Sept. 11: “we still need to bring down the euro.” If the euro’s weakening continues, the ECB will be under less pressure to expand its asset purchases to include government bonds. Another factor to watch is the ECB’s balance sheet, particularly how much the lending program will contribute to lifting it back to early 2012 levels—which implies an increase of around EUR1 trillion.

If demand for the next loan installment in December disappoints—as did September’s EUR83 billion take-up—then the ECB will have to find more assets to buy. With the private-debt option constrained, the ECB may then need to consider buying government bonds, a policy used extensively in the U.S., U.K. and Japan but that is deeply unpopular in Germany where the prospect rekindles fears of 1920s-style inflation.

Look for the ECB and financial markets to keep a close watch on an indicator Mr. Draghi put on center stage during a speech in August: the so-called five-year, five-year forward swap rate. This gauge of investors’ perception of inflation, starting in five years’ time, has weakened in recent weeks. With inflation so low, further declines in this index would up the pressure for broader asset purchases too.

One wild-card is Germany. Mr. Draghi had the backing of the German government for his main anti-crisis tool, an open-ended bond purchase program from 2012 called outright Monetary Transactions that hasn’t been used. This offset virulent opposition from Bundesbank President Jens Weidmann. But the finance ministry and Bundesbank have been united in criticizing the ECB’s latest plan to purchase private-debt securities.

That could complicate matters for Mr. Draghi if he decides to touch the Third Rail of German central banking: buying government bonds.

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Czech National Bank


By Sean Carney

The Czech central bank, which for 22 months has had its interest rates at near-zero rates, will maintain its policy of using the foreign-exchange rate as a monetary policy tool in the coming months as it seeks to boost consumer price growth.

The central European economy contracted for most of the past two years and was among the first countries in the region to face the threat of deflation. Central bank governor Miroslav Singer has recently said the bank will not allow the koruna to appreciate to more than 27 per euro at least until 2016. Mr. Singer said that the weak koruna has boosted exports and is now having the sought-after inflationary impact on the domestic Czech economy.

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Bank of Canada


By Nirmala Menon

The recent message from Canadian central bankers was clear. Despite a recent string of stronger-than-expected economic data, they are in no hurry to alter the Bank of Canada’s stance that rate cuts as likely as rate hikes.

Almost every economist expects the Bank to raise rates when it moves from the sidelines. Increasingly, it appears this will not happen until after the U.S. Federal Reserve starts lifting its benchmark rate, which investors expect around mid-2015.

This means the Canadian central bank’s benchmark overnight rate will end 2014 at 1% for the fourth consecutive year.

Gov. Stephen Poloz said on Sept. 16 that recent data have been encouraging and he is “cautiously optimistic” about the exports outlook. But a more substantial recovery is needed before Canadian firms become confident enough to boost investments and hiring, which will take time, he said.

Canadian policymakers are counting on exports and business investment to take the baton from indebted consumers and drive economic growth.

“What happens next is still is a question mark for us,” Mr. Poloz said. “And so I would say that there is still a strong case to be waiting and seeing.”

If Mr. Poloz was “squarely neutral,” subsequent comments from his second-in-command Carolyn Wilkins were “dovishly neutral,” according to TD Securities’ foreign exchange strategist Martin Schwerdtfeger.

Ms. Wilkins said on Sept. 22 that “persistent headwinds” may force the central bank to keep rates low even after economic slack is absorbed and the output gap—the difference between the amount of goods and services and economy can produce and how much it is producing–closes in about two years.

Two days late, her colleague on the rate-setting governing council, deputy governor Tim Lane, said Canadian policy can diverge from the Fed’s, and noted that the Canadian policy rate is higher than the near-zero U.S. equivalent–another suggestion that the bank of Canada will not front-run the Fed.

There is “absolutely no appetite for the Bank of Canada to move ahead of the Fed,” said TD Securities’ Mr. Schwerdtfeger.

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Reserve Bank of Australia


By James Glynn

After more than a year with interest rates at record lows, Australia’s central bank is still waiting for unambiguous signs of traction in the economy.

Unemployment has risen over the past year to a decade-high of just above 6%, while growth across the resource-rich economy remains patchy as a long mining-investment boom cools.

The low rates have done little so far except fire up the housing market. Of particular concern to the Reserve Bank of Australia is that the rampant house-price gains have been driven mostly by investors. That raises the risk of a crash down the line that could unwind its efforts to boost consumer spending and return the broader economy to a more healthy pace of growth.

The RBA is now in talks with the banking regulator over plans to make it harder for investors to get mortgages. It has warned that economic stability is at risk if the pace of house-price growth isn’t contained. The economy remains too weak for the RBA to raise interest rates from 2.5%. And some forecasters believe the central bank will leave interest rates unchanged until at least 2016.

A high Australian dollar, meanwhile, has held back exports in key industries such as tourism, manufacturing and education, though some of that pressure now appears to be coming off. The U.S. dollar has rallied amid rising expectations the Federal Reserve will move to raise interest rates next year. The Australian dollar has fallen 6% in the last month on the back of that, but a further drop would be needed to convince businesses the currency will stay low.

Inflation remains weak and wage growth has fallen sharply over the past year, raising hope the central bank won’t be facing an inflation shock any time soon. This has made it easier for the central bank to keep interest rates low to help the economy.

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People’s Bank of China



By Lingling Wei

China’s central bank has resisted pressure to open the credit spigot for much of the year. With a possible change of guard at the bank’s helm, its resolve will be further tested in the fourth quarter as the Chinese economy continues to sputter.

Some analysts, including economist Tao Wang at UBS, expect the People’s Bank of China to adopt more sweeping measures – such as a blanket cut in interest rates – in the next three to six months to stoke growth. They point to the continued weakness in industrial production and the property market, which accounts for a quarter of economic output.

So far, the People’s Bank of China, led by long-serving Gov. Zhou Xiaochuan, has convinced the leadership not to loosen monetary policy broadly for fear of boosting already high debt levels. Instead, the PBOC has launched a number of easing measures aimed at specific sectors, chiefly public housing, private businesses and rural areas. In mid-September, it injected $81 billion into China’s five big state-owned banks.

Those measures haven’t yet arrested the economic slowdown. Increasingly, Chinese leaders are concerned the economy may miss the government’s annual growth target – 7.5% in 2014 – for the first time since the Asian financial crisis of 1998. In recent months, Premier Li Keqiang has made lowering funding costs a top priority for the central bank, which isn’t independent of the government’s political leadership.

Adding to the uncertainty over monetary policy is the possible departure of Mr. Zhou. Beijing is considering replacing him as part of a wider personnel reshuffle that also comes amid these sharp policy battles.

“The PBOC was the last man standing” in opposing a broad stimulus plan, an adviser to the central bank says.

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Central Bank of Brazil


By Paulo Trevisani

Brazil’s central bank held interest rates steady in the third quarter, but found itself at the center of a presidential campaign debate over whether it should have more autonomy.

Brazilians elect a president in October and the two leading candidates are the incumbent Dilma Rousseff and Socialist-Party candidate Marina Silva.

The central bank reports to the president. Ms. Silva has pledged to grant the bank more autonomy by creating fixed terms for the governors.

The Rousseff camp countered that central-bank autonomy is equal to handing economic-policy over to bankers. A campaign commercial showed bankers plotting in a dark room while food disappeared from a working-family table.

Ms. Rousseff told reporters that, since an autonomous central bank wouldn’t focus on employment, its policies could “indeed take food out” from workers’ tables.

A central-bank spokesman declined to comment, and the central bank has remained aloof while pundits and politicians jumped on the subject.

Ms. Rousseff is seen by analysts as a hands-on manager when it comes to the economy. Many observers said she was a strong influence when the central bank cut rates to the historic low of 7.25% in 2012, even though inflation was above target, something both the Rousseff administration and the bank strongly deny.

The bank left its benchmark Selic interest rate unchanged at 11% through the quarter. The statement issued after its September policy meeting appeared to indicate no rate cut is in sight. The economy shrank in the first half of the year. Inflation is at 6.5%, while the target is 4.5% with a two-point tolerance range. The central bank and private-sector analysts don’t expect the target to be reached before mid-2016

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Bank of England


Bloomberg News

By Jason Douglas

The Bank of England remains on course to be the first of the world’s major central banks to finally call time on years of crisis-era policies and begin raising interest rates early next year.

BOE officials led by Gov. Mark Carney are expected to nudge up the U.K. central bank’s benchmark interest rate to 0.75% from 0.5% in the first quarter of 2015, roughly three to six months before the Federal Reserve is widely expected to begin raising short-term borrowing costs in the U.S. Mr. Carney, in a speech to trade unions in early September, said raising interest rates in the Spring would enable the BOE to keep inflation close to its 2% annual target and allow the economy to create another 1.2 million jobs.

“In other words, we would achieve our mandate,” he said.

A quarter-point rate increase next year would be the first in almost seven years, highlighting the U.K. economy’s long and difficult journey back to health after it was laid low by the global financial crisis and a subsequent recession. The BOE cut its benchmark rate to 0.5%–a 320-year low–in March 2009 and has kept it there since. Officials last raised interest rates in July 2007.

The U.K. economy is experiencing a burst of growth that has put it among the top-performing advanced economies in the world. Most BOE officials, mindful of the risk that a premature rise in borrowing costs could derail the recovery, have signaled that as long as inflation remains subdued they will hold off pushing up rates. Annual inflation has been below the central bank’s 2% target all year.

In particular, officials have said they want to see convincing evidence that Britons’ real wages are poised to rise. Excluding bonus payments, annual wage growth has averaged less than 1%.

Officials are also jittery about an array of risks from overseas that could push the U.K. off course, including feeble growth in the neighboring eurozone and conflict in Ukraine and the Middle East.

For two of the BOE’s nine rate-setters–Ian McCafferty and Martin Weale–the time to tighten has already arrived, and further good news on the economy may tempt one or two of their colleagues to their side before the end of the year. But for now, the majority appear to share Mr. Carney’s view that a rate rise can wait until 2015.

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Bank of Japan


Bloomberg News

By Jacob M. Schlesinger

Japan’s economy stumbled unexpectedly hard this summer, stoking skepticism about the effectiveness of the central bank’s stimulus program and stirring calls for more action.

Then in mid-September, Bank of Japan Gov. Haruhiko Kuroda got a reprieve, when the yen dropped suddenly to a six-month low against the dollar, fueling a new stock-market rally and giving fresh impetus to his campaign to boost inflation, by lifting import prices. Now Mr. Kuroda, who gave the currency an unusually hard push with rhetoric embracing its drop, will have an easier time fending off pressure to expand his easing program, at least through the end of this year.

Even so, the BOJ does face some thorny questions in the fourth quarter.

On Oct. 31, the policy board will have to update its economic outlook. Following a spate of weak data after the April sales tax hike, the central bank is all but certain to slash its forecast for growth for the fiscal year ending next March, a concession to critics who say the impact of the Kuroda “bazooka” hasn’t been as powerful as originally advertised.


In December, Prime Minister Shinzo Abe must decide whether to clear a second tax increase slated for next year. Mr. Kuroda has endorsed the move as necessary to curb the government’s swollen debt. Some Abe advisors want the central bank help cushion the blow with more easing. Those comments will likely grow louder as the decision nears.

By year’s end, the BOJ will also get forced into launching a discussion about updating and elaborating on its forward guidance, similar to the rocky debates earlier this year at the U.S. Federal Reserve and the Bank of England. The BOJ’s detailed asset-purchase schedule only runs through Dec. 31, and some investors are demanding clarity for 2015 before the year is out.

And as Mr. Kuroda nears his second anniversary next April, he will have to offer more details about just how he defines success in his two-year campaign to end deflation, whether it merits extension, or how to exit it.

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Global Central Banking in 2014, a Third Quarter Update for 26 Economies


Source: Wallstreet journal

Global Central Banking in 2014, a Third Quarter Update for 26 Economies

The cross-currents of the global economy leave the world’s central banks confronting varied policy choices in the months ahead. The U.S. and U.K. recoveries finally have enough momentum for the Federal Reserve and Bank of England to anticipate raising short-term interest rates from record lows next year. The European Central Bank and Bank of Japan 8301.TO -3.24% see still weak growth and inflation prompting calls for them to provide more stimulus. Several emerging-market central banks are struggling with the twin challenges of slowing growth and high inflation. And the central banks in China and South Africa may get new leaders soon.

Many central banks held interest rates steady in the third quarter, but a few made moves worth noting. The European Central bank and the central banks of Israel, South Korea and Turkey cut interest rates. New Zealand and South Africa raised rates. Central bankers in several countries focused on managing their exchange rates to support their economies.

Here’s a guide to the actions and outlooks for 25 central banks around the world, compiled by our global staff of reporters and editors. Click on the links below if you want to read just a few or read them all for fun. For a daily dose, sign up for Grand Central, our free, email roundup of news, analysis and commentary on global central banks.

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The Daily Startup: Popexpert to Provide ‘Lifelong Learning’ Online


Source: Wallstreet journal

Offering mediation, yoga and other “lifelong learning” classes online, new startup Popexpert wants to make self realization as convenient as launching a browser. Backed with $2 million from Learn Capital, Jeff Skoll’s Capricorn Investment Group and Paypal co-founder Ken Howery, the San Francisco-based startup is similar in function to the dozen or so other online learning startups that have launched during the past year, but it has a distinct focus. “We are looking at the things that make you better at life, work and play. More EQ [emotional intelligence] than IQ,” said founder and Chief Executive Ingrid Sanders.

Oligomerix hopes to stem a recent flow of bad news from Alzheimer’s disease drugmakers through a new approach that’s gaining currency among pharmaceutical companies. The New York company has raised $2.8 million in Series B financing, including newly issued convertible preferred shares and warrants, from Durand Venture Associates, Wheatley Partners and individuals. Oligomerix develops drugs targeting tau oligomers that are believed to impair learning and memory and to cause the spread of disease in the brain. By neutralizing extracellular tau, the company hopes to improve cognitive function and interrupt Alzheimer’s disease progression.

Also in today’s VentureWire, First Aid Shot Therapy has raised an undisclosed Series A round from new investor Sofinnova Ventures as it gears up to launch a line of over-the-counter medicines served in cans like sports drinks…AlephCloud Systems has raised $7.5 million in Series B funding as it prepares to release its software, which enables companies to enforce IT policies and protect data shared in cloud storage and file-sharing services like Dropbox and Box…and Swipely, a startup aiming to bring the latest business analytics to small businesses while processing their credit card transactions, said it closed a $12 million Series B round led by new investor Shasta Ventures.

(VentureWire is a daily newsletter with comprehensive analysis of all the investments, deals and personnel moves involving startups and their venture backers. For a two-week trial, visit our homepage, scroll to the bottom and click “try for free.”)

Immigration legislation that includes provisions to allow more highly skilled tech workers into the U.S. is headed for the Senate floor after clearing the Judiciary Committee Tuesday by a 13-5 vote in which three Republicans joined Democrats in supporting the bill.

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Discovery Invests $20M in Grockit to Reach ‘Lifelong Learners’ Online


Source: Wallstreet journal

Discovery Invests $20M in Grockit to Reach ‘Lifelong Learners’ Online

Moving away from a strictly-students market, one education-tech venture called Grockit has gained popularity and a new $20 million Series E investment led by Discovery Communications, which continues to broaden its educational content “beyond cable.”

According to Grockit CEO Roy Gilbert (an ex-Googler and U.S. Navy veteran), the entirety of the $20 million will go towards redesign and expansion of the company’s new “social learning platform” called Learnist.

Learnist, or Learn.ist in its current iteration, allows approved users to create “learn boards,” comprised of e-books, video content, Web pages and other digital material that show off their subject matter expertise. Anyone, not just paying students, can connect with them via Learnist.

Tutors and teachers use the platform to deliver digital coursework to their students, Gilbert said. The company actively recruits them to do so, along with other experts in their respective fields. For example, it can be used to “teach” people about cultural fare ranging from “The Philosophical Genius of Curb Your Enthusiasm,” to “Words that can’t be translated into English.”

As part of the Series E funding deal, Grockit also entered into a strategic partnership with its backers at Discovery. Is a Shark Week “learn board” in store?

A chief digital officer at Discovery, Jean-Briac “JB” Perette, said he doesn’t know where Discovery’s content could appear throughout Learnist, as “that’s up to the users.”

However, Discovery invested in the company because: “Our digital strategy is true to the mission of the company’s founder, to ignite and satisfy curiosity. We invest in the next-generation knowledge space to do this beyond cable,” he noted.

Another one of the companies Discovery has funded is the fitness-and-brain-games company Lumos Labs, better known as Lumosity.

While technically Discovery led the Series E investment in Grockit, Perette views it more “like a Series A investment in Learnist.” Launched in the summer of 2012, Learn.ist–a site, and apps for iPhone and iPad users–does not yet generate revenue for Grockit.

The total focus on Learnist — which feels like a Pinterest for educational content — may surprise those who know Grockit as a Princeton Review Inc or Kaplan Inc competitor.

When it started in 2007, Grockit leveraged social media and peer-to-peer concepts to transform test-prep online.

Grockit founder Farb Nivi, a one-time Kaplan teacher, says his company’s test prep products are still profitable and successful, so it plans to maintain and support these. But he and Grockit investors view social learning as a much larger opportunity overall.

Two of Grockit’s earliest angel investors were social media pioneers Reid Hoffman and Mark Pincus. Grockit’s earlier backers Summit Group, Atlas Venture, Benchmark Capital, Integral Capital Partners and GSV Capital also participated in the funding.

Grockit executives said they were focused on building their Learnist audience and user base, and on products more than a monetization strategy in the near term. However, Perette suggested they could generate revenue through advertising and highly targeted referrals.

“With digital we have the benefits of a two-way dialogue, constantly. Talking about what we know is incredibly powerful, so is learning about things we don’t know. It does not stop at age 22 when you graduate from college. Learnist, like Discovery, is going after the lifelong learners,” he added.

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Weekend Reading: Global Economic Outlook Q1 2013


Source: Wallstreet journal

The year 2012 was marked by pronounced economic uncertainty for many countries around the world, and for most of them, this trend will linger into 2013. In Europe, a fiscal crisis continues to kindle doubt about the survival of the euro, creating uncertainty that is casting a shadow on real economic performance in 2013. The United States may have already entered recessionary territory. Likewise, China, India and Japan are treading uncertain economic waters and scrambling to establish or maintain economic growth.

The first-quarter edition of Global Economic Outlook from Deloitte University Press begins with Alexander Börsch’s assessment of the eurozone, where uncertainty remains a recurring theme. Concerns about the future of the shared currency are giving way to worries about the real economy, which may take their toll on growth prospects in the coming year. See Eurozone: Greater Trust and Greater Uncertainty.

Next, Carl Steidtmann suggests that the United States, like Europe, is already in a recession. He offers his rationale for a negative GDP forecast that may pull the United States into recessionary territory in early 2013. He suggests that the depth and duration of this recession will differ according to the speed of the resolution. See United States: Peering Over the Fiscal Cliff and Into the Weeds.

The assessment of China’s economic outlook  is comparatively optimistic, according to Ira Kalish, Ph.D., editor-in-chief of Global Economic Outlook, and director of Global Economics, Deloitte Research in the United States, Deloitte Services LP. Chinese economic growth is accelerating after slowing down for most of 2012. Improving exports, industrial production, retail sales growth and declining consumer price inflation suggest that China is, in fact, on the mend. However, the country will need to navigate significant challenges. These challenges include ebbing foreign direct investment, a transition in political leadership and the country’s ongoing need to shift away from export-led growth in favor of its consumer-driven counterpart, all of which raise questions about China’s ability to stay its course. See China: Turning the Corner?

In the outlook for Japan, entitled Japan: Back into Recession, Mr. Kalish suggests that Japan did not end 2012 on the optimistic note it enjoyed a year ago. The country’s exports have been hampered by a recession in Europe, declining automobile sales, waning government spending, aggressive monetary policy that hasn’t offset the country’s formidable deflationary pressures, and a high-valued yen that continues to compromise the competitiveness of Japanese exports.

Finally, Pralhad Burli writes in India: Cautious Optimism Part Deux that growth in India may improve over the next two quarters after experiencing a period of deceleration. Economic challenges, including a burgeoning fiscal deficit, low investments, elevated inflation and high interest rates are looming over India’s outlook.

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