Those second round effects – again (EuroIntelligence)

28.01.2011

German inflation rises, prompting the ECB to step up its verbal warning on second round effects; Belgian inflation reached 3.2% as a result of indexing; rising inflation and hawkish ECB comments led to a fall in interest rate futures, and a rise in German two-year yields to a 15-month high; euro’s rally has ended; economists are sharply divided on the meaning of the rise in imported inflation; Eurostat rules that member states must account for EFSF debt as gross debt in the national accounts; the Basel rules have been one of the factor for the large oversubscription of EFSF bonds; Jean Quatremer says oversubscription is boost to the E-bond advocates; French economists remain obsessed about the gaps in Franco-German competitiveness; EU sentiment indicators stall; Willem Buiter, meanwhile, says EFSF only postpones the inevitable: sovereign default beckons.

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