Bundesbank Are Prepared for the End of Negative Rates Says Board Member Thiele

German Buba President Weidmann spoke about the Bundesbank’s Annual Report, in Frankfurt, with the following comments made: policy normalisation will take a long time and if the economic upswing continues and prices rise, there is no reason to not end QE this year. He said it is important to “gradually and dependably” reduce ECB stimulus. Rapid Eurozone growth confirms that inflation will move towards the target. There is evidence that FX movements are having a smaller impact on inflation than in the past. Germany’s and the Eurozone’s growth was “very satisfactory”. He also said that bigger QE reduction or a clearer end date would be justifiable. Finally, he said that an ECB rate hike in 2019 is ‘not completely unrealistic’. Eurozone Industrial Confidence (Feb) was as expected at 8.0, from a prior number of 8.8, which was revised up to 9.0. Economic Sentiment Indicator (Feb) was 114.1 v an expected 114.0, from 114.7 previously, which was revised up to 114.9. Business Climate (Feb) was as expected at 1.48, from 1.54 previously, which was revised up to 1.56. Consumer Confidence (Feb) was as expected at 0.1, from 0.1 prior, which was revised up to 1.4. Services Sentiment (Feb) was 17.5 v an expected 16.3, from 16.7 prior, which was revised up to 16.8. EURUSD traded between 1.23374 and 1.23245 after the release of this data. German Harmonised Index of Consumer Prices (YoY) (Feb) was 1.2% v an expected 1.3%, from 1.4% previously. The US Fed’s Powell testified on the Semi-annual Monetary Policy Report before the House Financial Services Committee, in Washington DC, in his new capacity as Chairman. Some of his comments were: He sees further gradual rate hikes and the outlook remains strong. Some headwinds facing the US economy are now tailwinds. Financial conditions are accommodative despite volatility and the Fed must strike a balance to avoid overheating and to lift inflation. The FOMC sees risks roughly balanced and is monitoring inflation. Wages should increase at a faster pace and the US economic outlook is strong, with inflation to rise to 2%. The recent wage increases likely have been dampened by weak productivity growth. Last year’s business investments should begin to lift productivity. A robust jobs market is expected to support income and spending. US Durable Goods Orders Ex-Transportation was -0.3% v an expected 0.4%, from -0.7% previously, which was revised up from 0.6%. Durable Goods Orders (Dec) was -3.7% v an expected -2.2%, from 2.6% previously, which was revised down from 2.9%. USDCAD traded between 1.27320 and 1.27072 after the release of this data. US S&P/Case-Shiller Home Price Indices (YoY) (Dec) was as expected at 6.3, from 6.4% previously. House Price Index (MoM) (Dec) was 0.3% v an expected 0.4%, from 0.4% previously, which was revised up to 0.5%. Japanese Large Retailer’s Sales (Jan) was 0.5% v an expected 0.4%, from 1.1% prior. Retail Trade s.a. (MoM) (Jan) was -1.8% v an expected -0.6%, from 0.9% prior. Retail Trade (YoY) (Jan) was 1.6% v an expected 2.1%, from 3.6% …