Europe Economics Update Don’t lose sleep over Bundesbank losses The Bundesbank may make large losses in the coming years but these will be paper losses only, will have no impact on the government’s fiscal position, and are likely to fall over time. While the... 26th June 2023 · 4 mins read
FX Markets Update The fall and fall of the Swedish krona The rapid depreciation of the Swedish krona has pushed the currency down to its lowest ever level against the euro. Worse still, we do not think the krona is significantly below “fair value”, nor do... 22nd June 2023 · 4 mins read
Europe Economics Update Riksbank will ignore “Beyoncé theory” and raise rates Some observers have suggested that the strength of Swedish inflation in May reflected buoyant demand driven by Beyoncé’s Stockholm concerts but the Riksbank is more likely to view it as evidence that... 22nd June 2023 · 3 mins read
Europe Economics Update SNB hikes by 25bp and signals more to come The 25bp rate hike announced by the SNB this morning was smaller than the 50bp hike we had predicted. But the accompanying statement and upward revision to inflation forecasts for 2024 and 2025... 22nd June 2023 · 3 mins read
Europe Economics Update Norges Bank steps up the pace, more hikes to come Today’s 50bp rate hike by the Norges Bank, taking its policy rate to 3.75%, was accompanied by new hawkish guidance and projections. As a result, we have revised up our already above-consensus... 22nd June 2023 · 3 mins read
Europe Economics Update Inflation falling but SNB set to hike rates further Policymakers are likely to raise the policy rate by 50bp to 2% next Thursday, despite inflation falling sharply this year. And SNB Chairman Thomas Jordan’s view that Switzerland’s neutral interest... 15th June 2023 · 4 mins read
Europe Economics Update ECB hikes and signals more to come The ECB raised its deposit rate to 3.5% today and President Lagarde all but promised another hike next month. Our baseline forecast remains that interest rates will peak in July and stay there until... 15th June 2023 · 3 mins read
Europe Economics Update Norges Bank to hike and signal higher peak We think the Norges Bank will follow through on its plan to raise its policy rate by 25bp next week, to 3.50%, although there is an outside chance of a 50bp hike. Either way, we think it will push its... 15th June 2023 · 3 mins read
Europe Economics Update TLTRO redemptions to reduce banks’ liquidity More than €1trn of TLTROs will be redeemed over the next eighteen months, significantly reducing euro-zone banks’ liquidity and pushing up their funding costs as they adjust their balance sheets... 7th June 2023 · 5 mins read
Europe Economics Update Euro-zone construction set to weaken We think that the slump in demand for mortgages will more than offset the support from the high backlog of work and result in a sizeable contraction in euro-zone construction output in the coming... 30th May 2023 · 2 mins read
Europe Economics Update Bank lending to remain very weak April’s money and credit data suggest that the decline in bank deposits in recent months is due to rising interest rates rather than worries about the banks’ stability. Meanwhile, bank lending... 30th May 2023 · 2 mins read
Europe Economics Update Nordic labour markets remain tight The labour markets in Norway and Sweden remain very tight, in line with conditions in the euro-zone. This is likely to keep services inflation high over the coming months and encourage the Norges Bank... 26th May 2023 · 2 mins read
Europe Economics Update When will the ECB cut rates? History suggests that in the absence of a major financial shock, European central banks usually leave interest rates at their peak for a year or more. That’s consistent with our view that the ECB is... 24th May 2023 · 4 mins read
Europe Economics Update Weak external demand to weigh on exports National GDP data released so far suggest that euro-zone exports rose in Q1. However we suspect they will be more subdued in the coming quarters as a result of weak global growth. 22nd May 2023 · 2 mins read
Europe Economics Update How much will ECB tightening affect GDP? Our best guess is that the impact of monetary policy tightening on euro-zone economic activity will be less than five percent of GDP, which is the lower end of a range estimated in an ECB Economic... 18th May 2023 · 4 mins read
Europe Economics Update EZ labour supply holding up relatively well The aggregate supply of labour in the euro-zone has recovered comparatively well from the pandemic, albeit with big differences between the major economies. But despite this, the labour market is very... 18th May 2023 · 4 mins read