Whatever it takes, sometime

3 August 2012 By Ian Campbell

With economic data bad in Europe and soft elsewhere, markets want salvation from central banks. But the ECB and the Fed have disappointed. Still, Europe’s policy-makers are not out of weapons and the euro zone is more resilient than it may seem. The global economy may be, too.

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The JPMorgan Global Manufacturing PMI fell to 48.4 in July from 49.1 in June, dipping further below the 50 threshold that signifies growth.
Markit’s eurozone purchasing managers’ index for the manufacturing sector fell to 44.0 in July, the lowest since June 2009.
China’s official factory PMI fell to an eight-month low of 50.1 in July. The Institute of Supply Management in the U.S. said its manufacturing index stood at 49.8 in July, up slightly from June but still signalling contraction. In Britain, the manufacturing sector shrank at its fastest rate in more than three years.
“Within our mandate, the ECB is ready to do whatever it takes to preserve the euro,” Mario Draghi, the ECB president, said on July 26. At the press conference on Aug. 2 after the ECB monthly policy meeting Draghi said “the Governing Council will consider further non-standard monetary policy measures according to what is required to repair monetary policy transmission. In the coming weeks we will design the appropriate modalities for such policy measures.”

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