Bertrand Dumont

Interview by Ritika Gupta at #CNBC on #Eurozone https://lnkd.in/eAyQp_g6 (Interview from min 9:30) I was in the Studio of CNBC in London for an interview about eurozone #inflation, growth, #ECB rate policy and the question if the ECB would activate the Transmission Protection Instrument (#TPI). In short - Inflation: stable this year due to disinflationary forces like EUR/USD and US-Tariffs, next year higher than 2.5% due to structural issues which persistent (demographics related labor shortage, deglobalisation making supply chains more expensive, climate change protection measures like higher CO2 prices) - growth: diverging picture especially in 2026, with Spain (1.9%) and Germany (1.5%) at the upper end and France and Italy only at 0,6%. Growth in Germany not so sustainable, because part of the special infrastructure fund is misused - ECB interest rate policy: One interest rate cut this year in the cards, but a close call. Second half of next year two rate cuts due to higher inflation - France and TPI: when push comes to shove, the ECB will certainly act by purchasing French government bonds to defend the euro and to buy time.

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Food for thought! "The role of MPC heterogeneity for fiscal policy in the euro area" by Nicolas Albacete, Pirmin Fessler, and Atanas Pekanov. "We assess the implications of heterogeneity in the marginal propensity to consume (MPC) for fiscal policy in the euro area. Extending the seminal work of Jappelli and Pistaferri (2014), we document an average MPC of 0.46, with significant variation across countries, household characteristics, and financial positions...The mean MPC ranges from 0.33 in the Netherlands to 0.57 in Lithuania." "Finally, we provide moments to support the calibration of Heterogeneous Agent New Keynesian models." https://lnkd.in/eaCCvGqf

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‼️📙New Study Alert: A recent Nature study analyzed 2,500 banks and found that European banks are highly exposed to ecosystem risks. Key findings include: ⭕ High Exposure to Ecosystem Risks: 72% of Euro area companies with high ecosystem dependency are connected to bank loans, and nearly 60% of loans are linked to companies facing unmet flood protection needs. ⭕ Concentration of Risk: Just 100 banks account for 87% of the total biodiversity footprint of the Euro area banking system, highlighting potential systemic vulnerabilities. ⭕ Climate-Ecosystem Interactions: Ecosystem degradation and climate change amplify risks to companies—and thus to banks’ portfolios. This study underscores the urgency for banks to integrate ecosystem risk considerations into their risk management strategies. Read full article is here👉: https://lnkd.in/eP5S7ZUU Congrats to the authors: Andrej Ceglar Alexandra Marques, Simone Boldrini, Chiara Lelli, Andrea Toreti, Laura Parisi, Irene Heemskerk!! 👏

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My take on the U.S.–EU trade deal and the broader trade war, published (in French) on Allnews.ch: https://lnkd.in/eA2YeEKZ   . The EU is one of many partners forced to sign a U.S. trade deal, accepting 15% tariffs to avoid 30%.   . Tariff cuts on cars (from 25% to 15%) are offset by massive EU promises: $750bn in energy imports, $600bn in U.S. investments, and military purchases.   . The U.S. offers almost nothing in return, keeps 50% tariffs on steel/aluminum, no service access, no procurement openings.   . The deal is one-sided. Europe backed down, despite having real leverage in intermediate goods and a large U.S. services surplus.   . But Europe’s true vulnerability is geopolitical: dependent on U.S. protection via NATO.   . The promised $250bn/year in energy is unrealistic. The $600bn investment pledge mostly repackages existing flows.   . Economic impact for Europe is mild (–0.3 to –0.4% GDP), absorbed by EU fiscal stimulus. Inflation risk is minimal.   . But the U.S. faces higher inflation (+2pp), slower growth (–1.4%), and a stagflation trap, far worse than Europe.   . Tariffs hurt American competitiveness and won't fix the trade deficit. More capital inflows = wider current account deficit.   . No one wins a trade war. But some lose faster. And this time, it’s not the EU.

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