STARK'S REPLACEMENT SET TO BE ANOTHER HAWK - Jurgen Stark's resignation from the ECB on Friday leaves an opening on the bank's executive board. This board is made up of the ECB's President Jean-Claude Trichet; its vice president and four other members, of which Mr Stark was one. The ECB's executive board, the governing council and each national Central Bank of the 17 member euro area makes up the Eurosystem, the objective of which is to safeguard the value of the euro.
Economist Lorcan Roche Kelly is chief Europe strategist at US firm Trendmacro - a US based firm providing analysis to corporate and institutional clients. He says that very little is known about Jorg Asmussen, the man tipped to replace Jurgen Stark at the ECB. He say that Mr Asmussen is a member of the German ministry of finance and no-one really knows his views on monetary policy. But because he is German, he is expected to another ''hawk'' on the ECB executive. The economist says that ECB hawks believe that fighting inflation is the most important thing, while ''doves'' have an easing monetary policy outlook and allow the buying of secondary debt.
The economist says Germans see a dovish policy as a policy to print more money and they fear a repeat of the actions of the German Weimar Republic in the 1920s when hyperinflation was a serious problem. He says it would be great if the ECB would start to use economic growth as 'the needle of the ECB compass', but he says the bank's mandate is price stability and it is charged with keeping inflation close to 2%. He says that while the ECB has been criticised for its reaction to the euro zone crisis, he says it does act when it feel it has to. He adds that the purchasing of sovereign debt two years ago would have been unheard of.
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MORNING BRIEFS - Activity in the Irish construction sector fell further last month, according to the latest index from Ulster Bank. It says that the economic climate weighed on the sector and that as well as the fall in activity, declines were also recorded in new orders, employment and purchasing activity. Of the various sectors the bank looks at, the civil engineering sector recorded the steepest fall in activity. And activity on housing projects fell at a faster pace than in July, and was the weakest sector overall. Business sentiment in the construction sector fell to its lowest level in six months, but firms still expect activity to be higher in 12 months' time than current low levels. The bank said that the sector continues to face a challenging outlook in the near term, as it is weighed down by the lack of new business. It says that given that activity levels are still extremely low, employment in the construction sector continued to decline, as it has done in every month since May 2007, although the pace of that decline has slowed for a sixth month in a row.
*** China's imports hit a record monthly high in August, indicating strong domestic demand despite concerns of a global economic slowdown. Imports were 30.2% higher than a year ago, government data released over the weekend showed and exports rose by 24.5%.
*** Britain's banks should ring-fence their retail and investment banking divisions to "make it easier and less costly to resolve banks that get into trouble", a UK Government-appointed commission said this morning. The Independent Commission on Banking said banks should be encouraged to implement reforms as soon as possible but changes should be completed by the start of 2019. The ICB said that the Government should seek agreement with Lloyds Banking Group to ensure its planned sale of 632 branches leads to the emergence of a "strong challenger bank" but fell short of recommending that more branches should be sold.
*** After falling to its lowest level against the dollar in more than six months on Friday after ECB board member Jurgen Stark's resignation, this morning the euro fell to its lowest level in ten years against Japan's yen. It is trading at $1.3523 cents and 85.45 pence sterling this morning.
