Downside risks include renewed tensions in “some” financial markets, high oil prices, unwinding of imbalances. Inflation expectations remain firmly anchored.
Money supply growth is weak. Price pressures from money supply are weak. Steep yield curve is pushing deposits out the curve, taking money from M3.
Flow of loans to firms was positive last month for first time since summer 2009. Reduction of bank balance sheets appears to have come to an end. Banks should take advantage of low rates and government programs to recapitalize.
