WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: Market focus is on this week’s two-day FOMC monetary policy meeting that commences today. A 25bps rate hike is almost fully priced in while, given the solid US economic momentum and the increasing likelihood for the long-awaited tax reform bill to become law by the end of this year, the updated Fed projections are expected to show an upward revision for GDP forecasts and a lower near-term unemployment rate forecast. Awaiting the Fed’s verdict, the USD was little changed on the day with the DXY index consolidating recent gains while US Treasuries were under pressure which was most pronounced at the short end of the curve. On the flipside, Bunds retained a positive tone supported by persistently contained inflation pressures in the euro area and the prevailing view that the ECB will not end abruptly the asset purchase programme while interest rates will remain at the current low levels well into 2019.
GREECE: According to press reports, speaking at a conference, European Commission Mission Chief to Greece Declan Costello, emphasised the need for Greece to keep up reform efforts even after the completion of the programme, in order to render Greece an attractive investment destination and support sustainable growth. At the same conference, Greek Finance Minister Euclid Tsakalotos expressed confidence that in the coming year discussions will revolve around the medium- and long- term debt relief measures and the accumulation of an adequate cash buffer that will allow for a decrease in interest rates and will facilitate a “clean exit” from the 3rd ESM programme. According to the Hellenic Statistical Authority (ELSTAT), the Turnover Index in Accommodation and Food Service Activities Sector during Q3 2017 increased by 13.9% compared to the Q3 2016 while the Overall Industrial Production Index in October 2017 recorded an increase of 0.5% compared with October 2016.
SOUTH EASTERN EUROPE
CYPRUS: The latest GDP estimate of Q3-2017 surpassed the most optimistic forecasts bringing the latest full year projection close to 4% in 2017.