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The fall in Sweden’s headline inflation rate in December was smaller than expected but it is unlikely to alleviate the pressure on the Riksbank to take bolder action to boost inflation. … Swedish CPI …
13th January 2015
The fall in Sweden’s headline inflation rate in December was smaller than expected but it is unlikely to alleviate the pressure on the Riksbank to take bolder action to boost inflation. … Swedish CPI (Dec. …
The recent sharp drop in both the price of crude oil and the value of the euro should have some positive effect on euro-zone economic output. We think that, on balance, the peripheral countries should benefit more than the region’s core. But the threat of …
12th January 2015
Data last week, including the drop in HICP inflation to -0.2%, heightened the risk of a prolonged bout of deflation in the single currency area. But on the face of it at least, the escalating political crisis in Greece and the forthcoming ruling by the …
9th January 2015
November’s country data on industrial production and trade suggest that the euro-zone’s major economies have continued to stagnate at best, increasing the threat of a prolonged bout of deflation in the currency union. … German, French and Spanish …
The euro-zone is back in deflation just over five years since the end of the last period of falling prices seen in 2009. But unlike that last bout, which lasted just five months, deflation looks set to last longer this time. Unless oil prices rebound, …
8th January 2015
The absence of such intense market pressures suggests that the probability of an imminent Greek exit from the euro-zone is lower than it was in 2011 and 2012. But should market pressures reintensify , a Grexit may now be a more viable prospect for both …
December’s EC business and consumer survey did little to alter the picture of weak euro-zone GDP growth at the end of 2014 and suggested that renewed concerns about Greece and Russia offset the perceived benefits of the drop in the oil price. … …
All peripheral economies narrowed their budget deficits in November, but fiscal consolidation is doing little to tackle debt ratios in some countries and they may only get worse if the euro-zone experiences a prolonged period of deflation. … Euro-zone …
7th January 2015
A bout of negative inflation could have some positive effects on the euro-zone economy by boosting real incomes and spending power. But the adverse effects on inflation expectations and peripheral countries’ debt consolidation efforts are potentially …
December’s sharp drop in euro-zone inflation into negative territory could herald the start of a prolonged and damaging bout of deflation in the currency union, which may in turn threaten to re-ignite the region’s debt crisis. … Euro-zone Flash CPI …
Recent strong downward pressure on the euro exchange rate might ease in the very near term. But further ahead, poor euro-zone growth, the implementation of quantitative easing and fears for the region’s indebted economies suggest that the currency is set …
6th January 2015
The downward revision to December’s euro-zone PMI added to signs that the economy is barely expanding. And with the price indices highlighting the threat of deflation, the ECB remains under intense pressure to increase its support. … Euro-zone Final …
There is growing evidence that, even before the latest drop in oil prices, the US shale oil revolution had started to weigh on oil producers in Latin America. Oil exports to the US from three of the region’s major oil producers (Venezuela, Mexico and …
5th January 2015
The idea that the ECB should finance a euro-zone investment fund instead of buying assets through a conventional quantitative easing programme has several potential benefits. But the scheme probably puts too much faith in public institutions to choose and …
23rd December 2014
The euro-zone economy behaved largely as we anticipated in 2014, with growth remaining distinctly sluggish, inflation falling, the ECB forced into more policy action and the euro weakening. The biggest surprise, perhaps, was the extent to which the bond …
19th December 2014
December’s German Ifo survey provided some comfort that recent overseas events have not yet hit the economy, but remains consistent with only weak rates of expansion. … German Ifo Survey …
18th December 2014
The euro-zone’s direct trade and financial links with Russia are relatively weak. Nonetheless, even a modest negative impact at a time when the region is already facing renewed internal problems could be enough to push the currency union back into …
17th December 2014
An ECB quantitative easing (QE) programme appears unlikely to be big enough to push the euro down sharply. But the prospect of continued stagnation in the economy and impending monetary tightening overseas should nonetheless see the single currency weaken …
16th December 2014
December’s sharp rise in German ZEW investor sentiment is an encouraging sign that confidence has so far not been hit by renewed problems in Greece, but the improvement is at odds with the weakness of the more reliable PMI. … German ZEW Survey (Dec.) & …
Sweden’s central bank today pushed back the date at which it expects to raise its policy rate from zero and revealed that it was preparing unconventional measures to make policy even more expansionary. We think that these may well include a programme of …
December’s flash euro-zone PMI survey suggested that the euro-zone economy probably lost steam in the fourth quarter and maintained the pressure on the ECB to deliver a major policy boost at its next policy meeting in January. … Euro-zone Flash PMIs …
The prospect of gaining power has prompted Greece’s anti-bailout party Syriza to soften its stance on some issues. But markets are still right to be worried, given uncertainty around its plans for debt renegotiation and fiscal loosening. … Are markets …
15th December 2014
We disagree with speculation that the resurgence of the Greek crisis and the fall in the oil price have reduced the chance of quantitative easing. Indeed, we think that both factors have increased the risk of deflation, supporting our view that the ECB …
12th December 2014
Euro-zone industrial data for October and employment figures for Q3 confirmed that, even before the resurgence of the Greek crisis and associated political and economic uncertainty, underlying economic activity was very weak. … Euro-zone Industrial …
Ireland’s small gain in GDP in Q3 leaves it on track to expand by close to 5% this year. But the published data may exaggerate the underlying strength of the economy. … Ireland GDP …
11th December 2014
The renewed fall in Sweden’s headline inflation rate in November will maintain the pressure on the Riksbank to push back the date at which it first expects to raise rates from the middle of 2016 when it meets next week. … Swedish CPI …
While the Swiss National Bank (SNB) left policy on hold today, it reaffirmed its “utmost determination” to defend its ceiling for the franc exchange rate. It may introduce a negative interest rate to help with this, but the key policy tool will continue …
The renewed fall in Sweden’s headline inflation rate in November will maintain the pressure on the Riksbank to push back the date at which it first expects to raise rates from the middle of 2016 when it meets next week. … Swedish CPI (Nov. …
The Icelandic Government’s preparations to scale back capital controls early next year certainly represent a positive first step towards lifting the restrictions. However, we remain cautious at this early stage since nothing has been announced and there …
10th December 2014
Contagion effects from Greece’s latest crisis have so far been reassuringly limited. But that may not last and the episode is a reminder that even those economies which have cut their budget deficits dramatically are not immune from political instability …
While the recent rise in Spanish house prices is another encouraging sign for the economy, we expect the housing recovery to be extremely slow. The Spanish economy still needs to undergo a painful rebalancing towards exports to ensure a sustained revival. …
9th December 2014
The two-month extension to Greece’s EU programme, agreed yesterday by euro-zone finance ministers, was expected given recent wrangling over the Greek Budget. But the further austerity it could bring poses risks for the Greek economic recovery. And the …
October’s modest rise in German industrial production suggests that the benefits of a weaker euro are so far being offset by weak demand in Germany and the rest of the euro-zone and bodes ill for GDP in the fourth quarter. … German Industrial Production …
8th December 2014
The rise in the euro during the ECB’s press conference last week apparently reflected disappointment that President Draghi did not provide more explicit signals that quantitative easing (QE) is coming. But we don’t think he could have been much more …
5th December 2014
The breakdown of euro-zone GDP in Q3 offered little encouragement that the region’s lacklustre economic recovery is about to pick up any meaningful momentum. … Euro-zone GDP Breakdown …
Iceland’s economy rebounded in Q3 after contracting for two consecutive quarters, led by a surge in investment. Although the quarterly data are very volatile, this expansion suggests that Iceland is continuing to recover gradually. … Iceland GDP …
Iceland’s economy rebounded in Q3 after contracting for two consecutive quarters, led by a surge in investment. Although the quarterly data are very volatile, this expansion suggests that Iceland is continuing to recover gradually. … Iceland GDP (Q3 …
ECB President Mario Draghi could hardly have sent clearer signals today that the central bank will launch a programme of quantitative easing very soon, probably in January. But we doubt that the policy will be big and effective enough to revive the …
4th December 2014
The recent further falls in global oil prices look set to push euro-zone consumer price inflation - already very low at just 0.3% in November - below zero in the early months of 2015. Provided that oil prices stabilise, the period of falling prices should …
3rd December 2014
The new Swedish Government lost a key parliamentary vote on its Budget today, throwing politics in the country into turmoil and raising the possibility of fresh elections. But the potential upheaval poses less of a risk to the Swedish economy than does …
The European Central Bank (ECB) is set to launch a full-blown quantitative easing (QE) programme this week or in January. But the political and economic limitations on the policy’s size and effects suggest that it is unlikely to revive the euro-zone …
November’s final composite PMI was revised down from the flash estimate and provided more evidence that the euro-zone economy has remained weak in Q4. … Euro-zone Final PMIs (Nov.) & Retail Sales …
Q3’s Swiss GDP figures suggested that the economy is still holding up well against the twin pressures of euro-zone weakness and the strong franc. But the Swiss National Bank may have more work to do to protect its currency ceiling and head off deflation. …
