This week’s decision by the ECB to leave interest rates on hold is likely to be the first of many – we think rates will remain at their current levels until the second half of next year. Meanwhile, Sweden’s Riksbank expects to require additional capital worth the equivalent of 1.3% of GDP to cover losses on its securities portfolio, but we don’t think that this is a significant macroeconomic or fiscal problem. Next week, we expect to learn that euro-zone GDP fell in Q3 and that headline inflation in the currency union dropped from 4.3% in September to 3.2% in October. And we expect Norges Bank to leave its policy rate unchanged at 4.25%.
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