Central Banks And Housing Prices: A Tale Of Three Countries (US, Germany and Japan)

23 t4The US Federal Reserve, the European Central Bank (ECB) and Bank of Japan (BOJ) have all been hyper-active in recent decades. But the low-rate policies have not produced the same outcomes.

The US, after home prices declined in 2008 and 2009, took a while to recover. Only in 2012 did US home prices begin to rise again.

csfeddffdd

Germany’s house prices also fell, but started rising again in 2010.

ecbgerm

Japan is a different story. Despite staggering increases in asset purchases by the BOJ (and negative lending rates), Japan has experienced a decline in housing prices.

japanho

So, The Fed’s Yellen, ECB’s Draghi and BOJ’s Kuroda have had different easing experiences.

My Kuroda! 

BN-EJ835_Kuroda_P_20140904085925

Advertisements

ECB And Draghi Keep Rates At Zero, Downgrades 2018 Inflation To 1.2% (To Infinity … And Beyond!)

The European Central Bank (ECB) President Mario Draghi is mimicking Buzz Lightyear from Pixar’s Toy Story: “To Infinity and Beyond!” That is, Draghi announced today that the ECB is keeping their key rates at 0%, 0.25% and -0.40%.

At today’s meeting the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively. The Governing Council expects the key ECB interest rates to remain at their present levels for an extended period of time, and well past the horizon of the net asset purchases.

ecbrates

And like the US, the measured inflation rate in the Gyrozone is forecast to be 1.2% in 2018 and 1.5% in 2019.

euroinflation

Of course, “Super Mario” thinks everything is beautiful in the European Zone. Although of the big three (Germany, UK and France), only Germany has YoY GDP growth of over 2%.

crisis090717

The good news? The number of EMEA (Europe, Middle East, Africa) countries with negative 2 year sovereign yields stayed at 19.

sweet19

But the Central Banks are engaged in a monetary form of “Dueling Banjos”

duelingbas

Or as Mario Draghi says, “To infinity … and beyond!” for ECB monetary policy.

Infinity and Beyond