Inflation remains ECB`s main priority for now

Markets sense that the effort by the Federal Reserve could help avoid degenerations, but can not change the course of events in the financial sectors. Trying to inspire resilient banks to lend again in the middle of a general reshuffle is a challenging task. More time is needed to take things back on track and another rate cut is possible in the coming months. The ECB, at the contrary, can still focus on inflation, as the economic slowdown is just arriving into the European continent.
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The Federal Reserve should cut rates again with housing in a freefallDespite improving slightly, housing remains a problem for the economy in the United States, as inventories are high and prices are still in a steep downtrend. The Federal Reserve should cut rates again and might bring them below 2.00% in the coming months. In fact, the S&P Case-Shiller Home Price Index indicated that prices of existing single family homes fell again throughout January. Sixteen of the twenty cites reported showed a loss with Las Vegas and Miami among the most beaten and Charlotte the only city with a gain year over year. Numbers lag by three months, but they are confirmed by more recent data. In February, as an example, existing home sales increased 2.9% (+0.7% expected) month over month, but they remain almost 24% below the level of one year ago. The up move covered both single homes (+2.8%) and multiple homes (+3.7%). However, inventories are at 9.6 months of supply, only a few ticks below the October¡¦s top of 10.5 months. New home sales slid instead to 1.8% (-1.7% expected) and are now almost 30% below the level of one year ago. Here, again, the Northeast (-40.3%) showed heavy losses, probably due to the adverse weather conditions. Inventories stay very high at 9.8 months of supply.