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The Swiss National Bank pledged to maintain its extremely supportive policy stance today, keeping interest rates as close to zero as possible and defending its exchange rate ceiling. But even at the current level, the franc is much too high for exporters’ …
14th March 2013
The Norges Bank’s decision to leave the policy rate unchanged reflects the dilemma facing the Bank as a strong currency prevents it from hiking rates to stem a housing boom. These countervailing pressures are likely to keep policy on hold until late-2014 …
Reviving lending to small and medium-sized enterprises is crucial for the euro-zone’s prospects given the importance of these firms to the region, particularly in the periphery. Indeed, ECB President Mario Draghi has repeatedly singled out the need to …
13th March 2013
Despite concerns that austerity is not working in the euro-zone, most of the region’s peripheral economies managed to reduce their budget deficits in 2012. But fiscal progress has been slower than expected and the economic costs have been considerably …
January’s fall in euro-zone industrial production is a timely reminder that, despite the improvement in business and financial market sentiment, the region is likely to have remained in recession in Q1 … Euro-zone Industrial Production …
We are not fully convinced by the argument espoused by Mario Draghi that Italian fiscal policy is on “automatic pilot” and that the budget deficit will narrow regardless of who eventually takes power. … Is Italy really on …
12th March 2013
Denmark is finally dragging itself out of its long slump. Households have started to deleverage, exporters have become more competitive and banks are now stronger. But given that these adjustments have further to run, the Danish economy will still lag its …
The detailed Portuguese GDP release for Q4 confirmed that the economy is in a worryingly deep and broad-based recession. The lack of evidence that the downturn is easing, coupled with voters’ growing resistance to austerity, suggests that financial …
11th March 2013
On balance, the latest batch of hard economic data from the euro-zone’s three largest economies makes fairly grim reading and casts further doubt on the view that the region as whole has begun to grow again. … Italian GDP (Q4), French Ind. Prod. & German …
The ECB’s inaction despite predicting continued recession and below-target inflation suggests that the central bank is either out of policy ammunition or holding what little it has back for an even rainier day. But we think it still has some ammo and …
January’s German industrial production figures added to the evidence that the economy entered 2013 in a better state than it ended 2012. But for the time being at least, growth seems to be modest at best. … German Industrial Production …
8th March 2013
Q4’s Icelandic GDP data confirmed that the economy is slowly recovering from its financial crisis. But while Iceland looks set to continue to outperform the peripheral euro-zone economies this year, growth will be pretty sluggish. … Iceland GDP …
Q4’s Icelandic GDP data confirmed that the economy is slowly recovering from its financial crisis. But while Iceland looks set to continue to outperform the peripheral euro-zone economies this year, growth will be pretty sluggish. … Iceland GDP (Q4 …
While some members of the European Central Bank’s Governing Council voted for an interest rate cut today, the majority still seems unconvinced that this would do any good. What’s more, the Bank suggested that there was very little that it could do to …
7th March 2013
Ireland and Portugal’s relative success in achieving fiscal targets and regaining access to financial markets has raised hopes about the sustainability of their public finances, particularly after hints that the maturity of their bail-out loans could be …
February’s drop in euro-zone CPI inflation to 1.8% brought it back below the ECB’s 2% “ceiling” for the first time since November 2010. While much of the recent drop reflects slowing energy inflation, there are growing signs of an easing in core price …
6th March 2013
The breakdown of euro-zone GDP in the fourth quarter revealed an increasingly broad-based decline. Timelier indicators still point to another contraction in GDP in Q1 despite their recent improvement. … Euro-zone GDP (Q4 …
More than a week after the general election, the political situation in Italy remains as uncertain as ever. With potentially months of political and economic deadlock ahead, we continue to expect rising market pressure sooner or later to force Italy to …
5th March 2013
January’s rise in euro-zone retail sales and the fall in the composite PMI in February add to evidence that while the recession in the region is slowing, it is not over. … Euro-zone Retail Sales (Jan.) & Final PMI Survey …
Recent data from the Netherlands have added to evidence from France that the euro-zone’s economic problems go well beyond the region’s periphery. We expect the Dutch Government’s opposition to additional support for the periphery to harden as the economy …
The French economy is set to fall further behind others in the euro-zone as labour market rigidity holds back competitiveness and household spending is hit by fiscal austerity. This might cause France to push harder for more supportive policies for the …
4th March 2013
Having swum against the tide of increased optimism towards the euro-zone for some months, we are wary of the temptation to leap on last week’s events in Italy as a vindication of our position. After all, political turmoil is hardly novel in Italy nor, …
February’s fall in euro-zone CPI inflation and the further rise in unemployment in January raised the chances of further policy action by the ECB. … Euro-zone Flash CPI (Feb.) & Unemployment …
1st March 2013
Q4’s Swedish GDP numbers confirmed that the robust recovery has fizzled out. But Sweden should still perform far better than the euro-zone and most of its neighbours in 2013. … Swedish GDP (Q4 …
The renewed deterioration in some indicators of economic activity and fears about the political situation in Italy should prompt the ECB to strike a softer tone after its next meeting. President Draghi might hint at a possible future interest rate cut or …
28th February 2013
The Italian economy’s dire end to 2012, combined with the growing likelihood of a long period of political deadlock, supports our long-held view that the consensus outlook for Italy is too optimistic. … Political uncertainty to push Italy deeper into …
While the euro-zone spotlight has recently switched to Italy, the latest economic news from Spain suggests that it might still be first to require the support of the ECB’s bond-buying programme. … Spain may still be the first to need …
February’s fall in German CPI inflation should ease fears of inflationary pressure in the euro-zone’s largest economy despite the continued fall in unemployment. … German Flash CPI & Unemployment …
The Danish economy contracted sharply at the end of 2012 as both weak domestic demand and the euro-zone crisis weighed heavily on economic activity. … Danish GDP …
Swiss GDP data for Q4 confirmed that, while growth is clearly slowing, the economy has continued to outperform most others in Europe. But we expect the economy to stagnate this year as problems in the euro-zone cause exports to fall. … Swiss GDP (Q4 …
The Danish economy contracted sharply at the end of 2012 as both weak domestic demand and the euro-zone crisis weighed heavily on economic activity. … Danish GDP (Q4 …
The renewed rise in Italian and other government bond yields following the inconclusive result of the Italian general election has raised questions over the continued effectiveness of the European Central Bank’s latest policy “bazooka”, so-called Outright …
27th February 2013
February’s rise in the euro-zone EC Economic Sentiment Indicator (ESI) confirmed that sentiment was rising – before the Italian election. But the recent bout of market uncertainty may lead to renewed falls in business and consumer confidence. … Euro-zone …
The latest euro-zone monetary data have brought further signs of an improvement in financial market conditions. However, lending to the private sector continued to contract and seems unlikely to recover in the near future. … Euro-zone Monetary Indicators …
Greece, Ireland and Portugal continued to make solid fiscal progress at the beginning of 2013. But Italy and Spain are likely to have missed their fiscal goals for 2012. … Euro-zone Fiscal Monitor (Feb. …
26th February 2013
Norway is in the midst of a long housing boom, but prices are not as over-valued as some valuation measures suggest. Given other downward risks to the economic outlook, we think that interest rates could remain lower than market and central bank forecasts …
The inconclusive outcome of the Italian election looks set to prompt a renewed bout of market pressure which may eventually force Italy to request a support package from the euro-zone. … Political deadlock could push Italy towards a …
Recent hints that the European Commission could grant further extensions to governments that are missing their deficit targets provide hope that the Commission will not force austerity regardless of the economic damage. But even without additional …
25th February 2013
Last week’s data brought some encouraging signs that the euro-zone’s export sector is holding up surprisingly well in the face of the strong euro. Nonetheless, a major export revival appears unlikely and there is little sign that the improvement in …
The second release of German Q4 GDP data confirmed that GDP fell sharply as exports weakened. But the rise in the Ifo in February supports other recent evidence that the economy has since recovered somewhat. … German Ifo Survey (Feb.) & GDP Breakdown …
22nd February 2013
The recent rise in German wage growth and signs of a further increase to come have prompted fears of a pick-up in inflation and loss of competitiveness. We think that these worries are overdone. Indeed, a moderate increase in wage growth would almost …
21st February 2013
The fall in the composite euro-zone PMI in February puts a dent in hopes that the region will emerge from recession in the first quarter. … Euro-zone Flash PMIs …
The EC consumer confidence survey rose for the third consecutive month in February in line with the general pick up in sentiment across the euro-zone. But the survey remains consistent with further falls in private consumption. … Euro-zone Consumer …
20th February 2013
Even if the Italian general election results in the formation of a stable pro-reform Government, Italy’s huge underlying economic problems suggest that it may only be a matter of time before concerns about the public finances begin to build again. And a …
The Danish central bank’s use of negative interest rates provides an insight into one of the few untried tools still available to major central banks. Denmark’s experience suggests that negative rates offer little support for a weak real economy, while …
19th February 2013
February’s rise in German ZEW investor sentiment added to the positive signs for the economy. But we still think it is too soon to bank on a strong and sustained recovery. … German ZEW Survey …
