30 May 2013
Flash: EC confirms extended budget deficit target deadline extensions - BTMU
FXstreet.com (Barcelona) - Lee Hardman, FX analyst at the Bank of Tokyo Mitsubishi UFJ notes that the European Commission confirmed yesterday that it had granted Spain and France two more years to meet its budget deficit targets, with the Netherlands and Belgium both given one more year.
He writes, “It also recommended that Italy alongside Hungary and Romania should exit the excessive deficit procedure. A slower pace of fiscal tightening should support the euro at the margin. The euro has also derived support in the near-term from the stronger than expected rebound in German inflation to 1.5 % in May which modestly lowers the probability of another refi rate cut in June. Still inflation as whole is expected to remain muted in 2013 averaging around 1.4%.”
He writes, “It also recommended that Italy alongside Hungary and Romania should exit the excessive deficit procedure. A slower pace of fiscal tightening should support the euro at the margin. The euro has also derived support in the near-term from the stronger than expected rebound in German inflation to 1.5 % in May which modestly lowers the probability of another refi rate cut in June. Still inflation as whole is expected to remain muted in 2013 averaging around 1.4%.”