At this stage, we have no significant hard data with which to assess economic activity in the euro-zone in Q3. But the signs from the business surveys are not promising. Meanwhile, the minutes of the Riksbank’s August meeting suggest that policymakers in Sweden have ruled out cutting rates in increments larger than 25bps, preferring a slow and steady approach. We think the ECB will take the same approach.
This weekend, populist parties are likely to perform well in German state elections, potentially exacerbating tensions in the governing coalition.
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