- Andrew Bosomworth, a senior portfolio manager at Pimco
Italian Finance Minister Pier Carlo Padoan said he is convinced that the European Central Bank will take steps to boost growth and stem the threat of deflation in the Euro zone. His comments came just days after new data showed growth in the 18-member area stagnated in the second quarter, as the German economy contracted and growth remained flat in France, while Italy has also slipped back into recession. Meanwhile, French Finance Minister Michel Sapin urged the European Central Bank to act to bring the single currency down to a level he described as more "normal." Sapin has also prompted the ECB in recent days to stimulate the Euro zone economy following recent disappointing growth figures. After the ECB cut interest rates in June and promised banks cheap long-term loans starting in September, the central bank has run out off its monetary policy instruments and all that is left is printing money to buy bonds aka quantitative easing. However, there are some practical and political barriers in the ECB's way, as it is boxed in by its own plans, and still faces strong opposition Germany to any such monetary softness.
In the meantime the Euro zone's current account surplus shrank in June, as the shortfall on current transfers widened notably from May. The current account surplus fell to a seasonally adjusted EUR 13.1 billion in June from EUR 19.8 billion in May.
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