The euro-zone will remain close to recession in the first half of the year as the effects of higher interest rates continue to weigh on household consumption and investment, and fiscal policy is tightened. Headline inflation will be close to the ECB’s 2% target for most of 2024 and core inflation will fall further. This should allow the ECB to begin a policy easing cycle around April. Elsewhere, we suspect that against the backdrop of continued low inflation, the SNB will start loosening policy in March. The Riksbank is likely to respond to the deep recession in Sweden by cutting rates in Q2. We also expect a sharp drop in inflation to cause Norges Bank to slash rates faster than its forecasts imply.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services