Confidence is important to to economic growth because consumers need to be confident about their future prospects in order to spend.
Businesses need to be confident in order to invest in growth.
Otherwise both will postpone their spending and investment decisions until they become more confident.
Central Bankers have been fighting volatility with stimulative ("easy") monetary policies since 2008 in order to curb volatility and inspire confidence.
The European Central Bank (ECB) embarked on an aggressive bond buying strategy at the beginning of 2015 as a form of "Quantitative Easing" to jump-start a European economy that has been been stalled and suffering from deflationary pressures.
This spike in volatility combined with the concerns over Greece has impacted European Confidence in May:
- This morning, data showed that European Area Business Confidence fell in May after having been improving earlier this year:
- Also this morning, data showed that European Area Consumer Confidence declined for the 3rd month in a row: