WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: In line with market expectations, the ECB did not make any policy changes at yesterday’s monetary policy meeting. However, in the press conference that followed the conclusion of the meeting, ECB President Mario Draghi announced that, barring unforeseen developments, the bulk of the decisions related to the future of the QE programme will probably be made at the October meeting. Mario Draghi acknowledged that the recent volatility in the exchange rate represents a source of uncertainty that requires monitoring as regards possible implications for the medium-term outlook for price stability. In reaction to the downward adjustment in inflation ECB forecasts, German Bunds extended recent gains with the 10-yr yield testing levels just below 0.30% for the first time in the last 2 ½ months. In FX markets, the EUR/USD marked a fresh 2 ½ year high of 1.2092 in spite of Mario Draghi’s attempt to talk down the common currency.
GREECE: The Bank of Greece (BoG) reduced the ELA-ceiling for Greek banks by €5.0 billion, to €33.9 billion, which according to the BoG reflects the improved liquidity conditions of domestic banks. According to the Hellenic Statistical Authority (ELSTAT) commercial transactions data, for the period January – July 2017 the total value of exports – dispatches increased +16.5% compared to the same period in 2016, while the corresponding change of the total value of imports – arrivals was +17.6%.
SOUTH EASTERN EUROPE
SERBIA: Confounding our and market expectations for unchanged interest rates, the National Bank of Serbia cut the key policy rate by 25bps to a new lifetime low of 3.75%.
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