Macro: ECB: Nailing Itself to a Hawkish Mast and more

• The ECB will end net asset purchases on 1 July and considers the persistent inflationary outlook to meet its conditions for monetary tightening to begin.
• Rate hikes in July and September are explicitly indicated, with a presumption in favour of the latter being 50bps unless the inflation outlook “persists or deteriorates”.
• That greater deposit rate jump would probably restore symmetry to the ECB’s policy rates (i.e. refi & MLF +25bps) as a one-off rather than starting a faster hiking pace.

• In a famous interview released on May 2020, Jerome Powell stated Central Banks can print money in digital format.
• And he is right, they indeed do that when they embark in policies such as QE.
• But he forgot to mention that what they print is bank reserves, which is money only for commercial banks and not for us common people.

• In Depth: College student depression hides anxieties about jobs and Covid

• Some Chinese colleges won’t let students graduate without proof of employment

• Regulatory reform forces China’s trust firms to cut back on risky lending

• Job market conditions improved further in early 2Q 2022
• Signals firmer economic activities, thus GDP growth, in into 2Q 2022

Unemployment rate fell to 3.9% in Apr 2022 (Mar 2022: 4.1%), lowest since 3.3% in Feb 2020, and averaged 4.1% in 4M 2022 (2021: 4.6%). This is as employment growth accelerated to +3.3% YoY in Apr 2022 (Mar 2022: +2.9% YoY) and +3.0% in 4M 2022 (2021: +1.7%). Data indicate firmer economic activities — thus improving job market conditions – in early-2Q 2022 after real GDP growth picked up to +5.0% YoY (4Q 2021: +3.6% YoY), and supports BNM’s decision to start unwinding monetary accommodation last month via the +25bps hike in OPR to 2.00%.