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The “account” of the ECB’s April meeting, released this week, revealed that policymakers had taken a pretty sanguine view of the weakness of survey indicators and hard data in the first few months of the year. Indeed, Council members believed that …
25th May 2018
The stabilisation of the German Ifo in May is encouraging and provides some hope that a rebound in growth is on the cards in Q2. We doubt that the economy will regain all of its lost momentum, but it should still put in a good performance over 2018 as a …
Norway’s labour market recovery looks set to gather pace in the coming months, but wage growth is likely to remain subdued. So we still think that the Norges Bank will wait longer than most expect before beginning to tighten monetary policy. … Norwegian …
The policies of the two parties likely to form Italy’s next government have understandably caused concern. In the near term , we actually think that they would provide a modest boost to the economy. But they are likely to worsen the economy’s long-run …
24th May 2018
Q1’s 0.3% rise in German GDP marked a weak start to the year. But temporary factors were partly to blame and the strength of investment in particular is an encouraging sign that the upturn still has legs. … German GDP (Q1, …
We expect wage growth in Sweden to pick up to around 3% by the end of the year. This should be enough for the Riksbank to start raising interest rates in December. … Will Swedish wage growth ever pick …
23rd May 2018
May’s fall in the euro-zone PMI yet again partly reflected temporary factors, but the continued softness of the surveys in Q2 is certainly a concern. … Euro-zone Flash PMIs …
A “yes” vote in Switzerland’s sovereign money referendum next month would completely overturn the current monetary system. It would constrain the Swiss National Bank’s approach to monetary policy, risks politicising the central bank, and would impair bank …
22nd May 2018
Data released this week added to the evidence that soft global demand and the previous appreciation of the euro have taken a toll on euro-zone exports. We doubt that exports will regain all of their lost momentum, but growth should pick up in the coming …
18th May 2018
A leaked draft policy document shows that there is still anti-euro sentiment bubbling under the surface in the two parties most likely to form the next Italian government. What’s more, the parties have discussed policies that would cause significant …
16th May 2018
While the Central Bank of Iceland left policy unchanged today, its new forecasts show that it expects inflation to remain above target for the next three years. Moreover, we think that the Bank is underestimating the scope for inflation expectations and …
We think that the slowdown in euro-zone GDP growth in Q1 largely reflected temporary effects. So we remain optimistic that the economy will perform better over the rest of the year. … Euro-zone GDP (Q1), IP (Mar.) & German ZEW …
15th May 2018
The sharper-than-expected slowdowns in both German and Dutch GDP in Q1 suggest that there is a risk that euro-zone GDP will be revised down from the first estimate of 0.4% q/q. But with Q1’s weakness largely down to temporary factors, we continue to …
Norway’s economy did not perform as well in Q1 as the headline growth numbers imply. But we remain optimistic about growth over the rest of the year. Meanwhile, Finland’s economy put in a strong performance in Q1, and the latest activity surveys bode …
With attention in Italy focused on politics, some significant improvements in the banking sector have gone under the radar. That said, the banks are still a long way from a full recovery. … Italy's banks are on the mend, albeit …
14th May 2018
Ahead of Q1 GDP releases over the coming weeks, the official monthly data suggest that growth slowed in Switzerland and the Nordics. Indeed, retail sales in Switzerland increased by 0.6% in Q4 last year, but flat-lined in the first three months of this …
11th May 2018
One year into President Emmanuel Macron’s term, the French economy is performing well. Annual GDP growth is healthy and the labour market is recovering steadily. But this owes little to Macron’s efforts so far, reflecting instead the impact of previous …
The Central Bank of Iceland is likely to leave policy unchanged next week. But with inflation set to rise, we expect it to raise interest rates later this year. … Central Bank of Iceland on hold for …
10th May 2018
The fundamental differences between Italy’s Five Star Movement and League suggest that even if they agree to form a government together, they will not implement either party’s more extreme and costly policy proposals. We would still expect to see a fiscal …
Euro-zone GDP data for Q1 were pretty weak. Indeed, quarterly growth in the euro-zone economy slowed from 0.7% in Q4 to just 0.4%, its weakest rate since Q3 2016. And national data showed that growth declined in France and remained subdued in Italy, while …
9th May 2018
Easter timing effects distorted April’s inflation data. Looking ahead, inflationary pressure is building in Sweden and, to a lesser extent, in Norway. Inflation is much more subdued in Switzerland. … Sweden, Norway, Switzerland CPI …
The minutes to the Riksbank’s April meeting were slightly hawkish and suggest that the Bank is on track to raise interest rates this year. We think that markets have gone too far in pushing the krona to a nine-year low against the euro and see the …
8th May 2018
March’s improvements in German industrial production and the trade balance support our view that while Q1 was a pretty poor quarter, this will not mark the start of a sustained economic slowdown. … German Industrial Production & Trade …
We think that temporary factors – including industrial action, cold weather and an outbreak of the flu – explain about 0.2 percentage points of the slowdown in quarterly euro-zone GDP growth from 0.7% in Q4 to 0.4% in Q1. So without those effects, growth …
4th May 2018
March’s euro-zone retail sales data suggest that consumer spending had a weak first quarter. And April’s Composite PMI implies that the pace of GDP growth is unlikely to fully rebound after a slow Q1. But we remain fairly optimistic that the economy will …
Swedish private sector production was unchanged in March meaning that growth slowed over Q1 as a whole. Nevertheless, this still implies that GDP expanded at a respectable rate. … Swedish Private Production …
April’s unexpected fall in inflation partly reflected Easter timing effects, providing some hope that it will prove temporary. But with underlying price pressures subdued, the ECB will continue to tread cautiously in normalising monetary policy. … …
3rd May 2018
In today’s monetary policy announcement, the Norges Bank reiterated that it expects to raise interest rates this year. But we still suspect that it will ultimately wait until Q1 2019 before beginning to tighten policy. Together with our forecast for oil …
We think that after the ECB has ended its asset purchases, bond yields will generally rise only slowly. The biggest increases are likely to come in the periphery, with Italy most at risk of a sharp sell-off. … How will the end of ECB QE affect bond …
2nd May 2018
Temporary factors explain some of the slowdown in euro-zone GDP growth in Q1. We doubt that the economy will regain all of its lost momentum, but surveys suggest that growth will pick back up. … Euro-zone GDP (Q1) & Unemployment …
The Swiss franc and Nordic currencies have come under pressure this year. While we think that the franc and the Norwegian krone have further to fall, we suspect that the Swedish krona will rebound. … Will Swiss and Nordic currencies recoup their …
April’s manufacturing PMIs provide some reassurance that the Swiss and Norwegian economies bounced back after making slow starts to the year. Sweden’s PMI was quite weak, but other survey indicators remain pretty strong and manufacturers should also …
Germany faces little threat from the US aluminium and steel tariffs that might come into force this week, but would be hit harder than most other European economies if the US imposed broader tariffs. That said, these alone would probably only dent …
30th April 2018
German HICP inflation dipped from 1.5% to 1.4% in April as increases in energy and food inflation were offset by a fall in the core rate. While the latter partly reflected temporary effects, the continued weakness of price pressures in the euro-zone’s …
March’s euro-zone money and lending data add to the evidence that economic growth has peaked. But with households’ and firms’ demand for loans still strong, and ECB policy set to remain accommodative, we think that bank lending will continue to support …
The small rise in the KOF Economic Barometer in April is consistent with continued healthy growth in Switzerland. But with inflation still very weak, we expect the SNB to strong monetary policy support in place even as other central banks begin to tighten …
Amid escalating international trade tensions, the Nordic and Swiss currencies depreciated across the board in April. Weaker exchange rates helped to give equities a boost, while the main bourses in Norway and to a lesser extent Finland also benefitted …
27th April 2018
The upward revision to our 2018 oil price forecast means that the contribution from energy to headline inflation will be a bit bigger than we had previously assumed. But this effect is likely to be small and core inflation is set to remain fairly subdued …
April’s unchanged reading in the EC’s measure of euro-zone economic sentiment provides further reassurance that the weakness of activity in Q1 does not mark the start of a sharp slowdown. … EC Business & Consumer Survey …
The first estimates of French, Spanish and Austrian GDP in Q1 suggest that quarterly growth in the euro-zone as a whole slowed from Q4’s 0.7% to around 0.4%. Meanwhile, there were no signs of rising core price pressures in April’s French and Spanish …
The ECB opted to leave its policy and guidance unchanged today, expressing caution about the softer tone of economic data. But it argued that growth was merely moderating from a strong pace and expressed confidence in the inflation outlook. We suspect …
26th April 2018
The Norges Bank is unlikely to respond to recent weak data by altering its forward guidance next week. But we still think that it will ultimately tighten policy a little more slowly than generally expected. … Norges Bank to keep guidance unchanged, for …
The Riksbank now expects interest rates to remain unchanged until Q4. We think that the Bank will raise rates gradually this year and next, before adopting a faster pace of tightening in 2020. … Riksbank delays interest rate …
The safe haven Swiss franc has depreciated steadily over the past couple of months despite geopolitical worries and rising protectionism. We think that the franc will continue to weaken as the ECB pushes ahead with policy normalisation while weak …
25th April 2018
April’s disappointing Ifo survey added to signs that the German economy is slowing, but not as sharply as recent hard data imply. This is further cause for caution ahead of the ECB’s meeting this Thursday and we doubt that the Bank will alter its dovish …
24th April 2018
April’s PMI surveys suggest that the apparent sharp slowdown in Q1 was not the beginning of a major downturn, although growth is unlikely to return to the rates seen last year. Overall, the data support our view that the ECB will make no major changes to …
23rd April 2018
While the Nordics and Switzerland seem to have made slow starts to 2018, the outlook for these economies is generally pretty bright. Nevertheless, healthy rates of economic growth will push up inflation at different speeds in different countries. We think …
20th April 2018
Developments in Germany this week have increased concerns that the euro-zone’s growth engine is really starting to sputter. But we think that some of these concerns are overdone. After all, recent declines in indicators of investors’ expectations tell us …
With the economic data weakening, but some members of the Governing Council keen to bring asset purchases to an end, President Draghi is unlikely to give much away next week. We suspect that the ECB will remain fairly confident in the outlook for growth …
19th April 2018
At next week’s meeting, the Riksbank is likely to cut its GDP growth and inflation forecasts. This leads us to expect the Bank to signal that interest rate rises will come later than policymakers previously thought, but we still expect an increase this …
