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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 …
While the latest data suggest that the European economies made a weak start to the year, we do not see this as the start of a serious slowdown. The euro-zone in particular has more spare capacity than official estimates suggest and we think that stronger …
18th April 2018
April’s further decline in the ZEW measure of investor sentiment in Germany suggests that investors are worried that escalating trade tensions and broader geopolitical concerns will take their toll on the export-reliant economy. … German ZEW Survey …
17th April 2018
The euro has been buffeted recently by concerns about protectionism, which have caused it to strengthen, and softer economic data, which have caused it to weaken. While the risks of an all-out trade war have risen, we still think that negotiations will …
13th April 2018
Both the Swiss franc and the Swedish krona have depreciated by almost 1.5% against the euro over the past month. This has left the franc trading at its weakest level since the Swiss National Bank abandoned its cap on the exchange rate just over three …
After widening in February, the euro-zone’s nominal goods trade surplus is on track to be little changed in Q1. Looking ahead, the surveys suggest that the contribution from net trade to economic growth has peaked but will remain positive. … Euro-zone …
February’s fall in euro-zone industrial production confirms that the sector made a soft start to 2018. But as this partly reflected temporary factors in Germany and the industrial surveys remain strong, we do not expect it to mark the start of a sharp …
12th April 2018
Although headline inflation increased to the Riksbank’s target in March, inflation excluding energy remained somewhat weaker. At its April meeting, we expect the Bank to signal that it will raise interest rates later than it previously anticipated, but …
Despite Spain’s recent strong run of form and the prospect of higher wage growth, we suspect that core inflation will remain subdued at close to 1% this year and next. With inflation set to remain in check even as wage growth picks up, the prospects for …
10th April 2018
National data suggest that the euro-zone’s industrial sector fared poorly in February, despite whopping rises in energy production as a result of the unseasonably cold weather across much of the region. The weakness in manufacturing was disappointing and …
March’s weak inflation data in Norway strengthen the case for the Norges Bank to move only very slowly towards tightening monetary policy. We suspect that it will wait until 2019 to raise interest rates, later than the Bank and investors currently …
The most recent official euro-zone data have been weak and the latest business surveys are consistent in their message that the economic expansion has lost momentum. A sanguine view of this is that firms are simply facing short-term capacity constraints …
6th April 2018
February’s sharp fall in industrial production confirms that the German economy made a soft start to the year. But the business surveys suggest that this should prove to be temporary. … German Industrial Production & French Trade …
Euro-zone money and lending growth slowed in February, adding to the evidence from the official data and business surveys that economic growth has peaked. Growth in “narrow” money – which is the sum of currency in circulation and overnight deposits – fell …
5th April 2018
February’s euro-zone retail sales data suggest that consumer spending made a slow start to 2018. And March’s Composite PMI implies that overall GDP growth has peaked. But we remain fairly optimistic about the economic outlook. … Euro-zone Retail Sales …
Despite February’s rise, Swedish private sector production growth appears to have slowed in Q1. But economic growth should remain healthy this year and inflationary pressures are building, so we still expect the Riksbank to raise interest rates in the …
The renewed rise in Swiss inflation in March will be welcomed by the Swiss National Bank. But with pipeline price pressures still very subdued, we doubt that the SNB will alter its ultra-accommodative policy stance any time soon. … Swiss Consumer Prices …
February’s fall in euro-zone unemployment to its lowest level since late 2008 is good news for the ECB. But with core inflation remained weak in March, so the Bank will continue to stress its patient and persistent approach to monetary policy …
4th April 2018
The activity surveys across the Nordics and in Switzerland generally weakened in Q1. But they were still fairly strong, so on the whole these economies seem to have performed reasonably well in the first three months of 2018. … How did the Nordic & Swiss …
3rd April 2018
The new German Government plans a fiscal boost equivalent to around 0.4% of GDP per year during its term. Increased spending on child benefits, pensions and refugee integration will support consumer spending growth in particular and we see GDP rising by …
Positive fiscal data have been something of a rarity in France in recent years, so President Emmanuel Macron will have welcomed the news earlier this week that the French budget deficit for 2017 was smaller than the Government had forecast. This largely …
29th March 2018
March’s increase in German consumer price inflation reflected a rebound in the volatile food and energy components. The headline rate remains low, at 1.5%, and there is still limited evidence of a rise in underlying price pressures. This will add to the …
In March, equity prices and bond yields in the Nordics and Switzerland were pushed down by concerns about US trade policy, while exchange rate movements were more mixed. Looking ahead, we expect yields to rise while equities continue to struggle. … Trump …
Despite falling in March, the Swiss KOF Economic Barometer is consistent with annual GDP growth remaining fairly healthy. But with inflation subdued, we expect the SNB to keep interest rates on hold until 2020. … Swiss KOF …
The further fall in the EC’s measure of economic sentiment in March echoes the message from the other surveys that euro-zone GDP growth may be at its peak. And with consumers’ inflation expectations declining again, the ECB will tread very carefully in …
27th March 2018
February’s euro-zone money and lending data add to the evidence from the activity surveys that economic growth has topped out. But with interest rates likely to rise only slowly as the ECB normalises policy, bank lending looks set to continue supporting …
The Swedish economy has lost some momentum of late, but growth still looks set to be healthy. And with inflationary pressures gradually rising, we expect the Riksbank to raise interest rates this year. … Sweden Econ. Tend. Survey (Mar.), Trade & PPI …
