ECB monetary policy could temporarily ease inequality in Europe

The European Central Bank's ultra-easy monetary policy may actually reduce income inequality in Europe, ECB Vice President Vitor Constancio said on Tuesday, rejecting the argument that asset buys disproportionately benefit the wealthy.

Constancio said the ECB's stimulus measures lower unemployment and thus increase disposable income for Europe's poorest, compressing inequality, at least in the short term.

"This result confirms that, from the distributional perspective, the main impact of expansionary monetary policies is on the reduction of unemployment with positive effects on the reduction of inequality," Constancio said in Lisbon.

"(Monetary policy) measures can improve their welfare and contribute toward reducing income disparities, at least in the short-term."

But he added that such steps are likely to be temporary with the "hollowing out of the middle class" and the increasing polarisation of incomes likely continuing over the longer term.
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US jobless claims rise by 3,000 amid tightening labour market

The number of Americans filing for unemployment benefits unexpectedly rose last week, but the underlying trend remained consistent with a tightening labour market. Initial claims for state unemployment benefits increased 3,000 to a seasonally adjusted 244,000 for the week ended Aug. 5, the Labor Department said on Thursday.

Data for the prior week were revised to show 1,000 more applications received than previously reported.

Economists polled by Reuters had forecast claims would be unchanged at 2,40,000 in the latest week. With the labour market near full employment, there is probably limited room for claims to continue declining.

Claims have now been below 300,000, a threshold associated with a healthy labour market, for 127 straight weeks. Thatis the longest such stretch since 1970, when the labour market was smaller. The unemployment rate is 4.3 percent.

Labor market tightness could encourage the Federal Reserve to announce a plan to start unwinding its $4.2 trillion portfolios of Treasury bonds and mortgage-backed securities at its policy meeting next month.
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Eurozone economy grows twice as fast as UK's for second straight quarter

The euro zone economy confirmed a robust expansion in the second quarter of the year, growing twice as much as Britain for the second consecutive quarter, preliminary estimates released by the European Union's statistics agency showed on Tuesday.

The reading confirmed the trend begun this year as the 19-country currency bloc consolidates its recovery while Britain starts to feel the negative impact of its decision to quit the European Union.

Gross domestic product (GDP) in the euro zone increased 0.6 per cent on the quarter, after a slightly downwardly revised 0.5 per cent rise in the first quarter, Eurostat's data showed.

In the March-June period, Britain's economic output grew by 0.3 per cent on the quarter, edging up from a sluggish rate of 0.2 per cent in the first three months of the year.

Britain's slowdown comes after the country showed robust growth last year, outgrowing the euro zone in the last three quarters.

The loss of pace coincides with the beginning of divorce talks with the EU in March and increased prospects of no access to the EU market after Brexit for Britain-based companies.

Meanwhile, the euro zone economy has picked up speed, bolstered by higher business optimism, strong domestic consumption and decreasing unemployment, which in June reached its lowest level since 2009.
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