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The adverse market reaction to the ECB’s bolder-than-expected package of policy measures unveiled on Thursday reflected concerns, partly prompted by comments from President Mario Draghi , that the central bank is running out of policy ammunition. Those …
11th March 2016
While a ‘no’ vote in the upcoming Dutch referendum on the European Union’s Association Agreement with Ukraine might have few direct effects, such an outcome would illustrate the Dutch population’s growing discontent with the EU and bode ill for the …
10th March 2016
While the ECB today delivered a package of measures which exceeded market expectations, there is no guarantee that it will revive the euro-zone’s flagging economic recovery and eliminate the threat of deflation in the currency union. … ECB belatedly …
In Q4, Ireland’s economy recorded another rapid expansion, but we are not too concerned about the economy overheating. Growth is likely to slow this year and price pressures appear to be fairly weak . … Ireland GDP …
January’s rise in French industrial production supports the message from German data that the sector had a good start to the year. But German exports fell in January, suggesting that softer global demand is damaging growth. … French Industrial …
Although Icelandic GDP contracted in the final quarter of last year, the big picture is that annual GDP growth accelerated sharply in 2015. … Iceland GDP …
Although Icelandic GDP contracted in the final quarter of last year, the big picture is that annual GDP growth accelerated sharply in 2015. … Iceland GDP (Q4 …
The resumption of the first formal review of Greece’s third bailout has raised hopes that the country’s creditors may soon grant it some form of debt relief. But it won’t be big enough to make Greece’s debt burden sustainable and hence ensure its …
9th March 2016
The latest rise in Portuguese bond yields reflects fears that its debt will soon be classified as junk by all four major ratings agencies, leading the country to be excluded from the ECB’s asset purchases. These fears seem justified, suggesting that …
8th March 2016
The second estimate of euro-zone GDP in Q4 showed that the consumer recovery, which boosted growth last year, is losing steam. With recent evidence that growth is slowing and inflation expectations are falling, this adds to the pressure on the ECB. … …
January’s surprisingly strong gain in German industrial production is unlikely to signal the start of a lasting recovery and hence should not discourage the ECB from further bold policy loosening on Thursday. … German Industrial Production …
The euro-zone’s latest bout of deflation is likely to prove fairly short -lived. But the medium-term inflation outlook is far too weak for the ECB’s comfort and the threat of a deflationary spiral is real. The Governing Council must deliver further …
4th March 2016
The ECB has signalled a further loosening of monetary policy at its forthcoming meeting on 10 th March. And while December’s under-deliverance highlights the risk of another disappointment, the deteriorating economic outlook should persuade the Governing …
3rd March 2016
January’s euro-zone retail sales data provided some relief that the consumer sector did not lose as much steam as had been feared around the turn of the year. But the outlook for the sector is darkening. … Euro-zone Retail Sales (Jan.) & Final PMIs …
Recent evidence of a slowdown in the euro-zone’s economic recovery has been accompanied by a drop in consumer price inflation back below zero in February. The fall was partly down to food and energy effects and a prolonged bout of deflation looks …
2nd March 2016
The limited supply of eligible government bonds need not prevent the ECB from delivering the significant increase in asset purchases that is needed to impress investors. We see it buying the debt of a bigger range of quasi-public companies and maybe …
Q4’s rise in Swiss GDP came as a relief given the uncertain global environment and strength of the franc. But with persistent deflation posing a serious threat to the economy, we still see the SNB increasing its policy support this month. … Swiss GDP …
Q4’s rise in Swiss GDP came as a relief given the uncertain global environment ands trength of the franc. But with persistent deflation posing a serious threat to the economy, we still see the SNB increasing its policy support this month. … Swiss GDP (Q4 …
The latest fiscal data suggest that the euro-zone’s peripheral economies improved their budgetary positions at the start of 2016. Further consolidation is likely this year but political pressures may see the pace of tightening ease in some countries. … …
1st March 2016
January’s fall in euro-zone unemployment was encouraging, but the rate remains too high to boost wage growth. And survey evidence suggests that the labour market recovery is starting to slow. … Euro-zone Unemployment (Jan.) & Manufacturing PMI …
As expected, the Irish election did not provide a clear victor. It is possible that uncertainty while the parties negotiate to form a coalition government could hurt the economy. But the Irish economy is in a strong position to weather a small, short-term …
29th February 2016
February’s drop in euro-zone CPI inflation back into negative territory clearly intensifies the pressure on the ECB to announce a decisive increase in its policy support following its meeting next week. … Euro-zone Flash CPI …
Although Sweden’s economic boom continued in Q4 2015, strong domestic demand has not yet fuelled inflationary pressures. As such, we continue to think that the Riksbank will need to ease policy further. … Swedish & Danish GDP …
Although Sweden’s economic boom continued in Q4 2015, strong domestic demand has not yet fuelled inflationary pressures. As such, we continue to think that the Riksbank will need to ease policy further. … Swedish & Danish GDP (Q4 …
Last week’s data brought further evidence that growth in the euro-zone economy has slowed in the first quarter of this year. That no doubt partly reflects the heightened concerns over the global economy and the associated gyrations in financial markets. …
26th February 2016
German CPI data revealed that inflation fell back below zero in February and, alongside weak readings for French and Spanish inflation, suggested that the eurozone has re-entered deflation. … German, French & Spanish Flash CPI …
February’s EC consumer and business survey supported the message from other survey indicators that the euro-zone’s economy is slowing. … EC Business & Consumer Survey …
The latest deal between two Spanish political parties does not guarantee the formation of a government and new elections may take place before long. While the economy has weathered the uncertainty well so far, there are early signs of a hit to confidence …
25th February 2016
January’s euro-zone monetary data added to the evidence that economic growth in the currency union is slowing, putting further pressure on the ECB to loosen monetary policy significantly at its meeting in March. … Euro-zone Monetary Indicators Monitor …
The Norwegian economy looks much weaker than the Norges Bank had anticipated at its last meeting in December. With the outlook for GDP and inflation having deteriorated, we think that the Bank will cut its policy rate by at least 50 basis points this …
24th February 2016
Euro-zone consumers have spent a lot of their savings from falling oil prices on clothing and, to a lesser extent, furniture and electronics. This boost is unlikely to last and if oil prices rise gradually as we expect, spending growth in these sectors in …
23rd February 2016
February’s sharper-than-expected decline in the German Ifo Business Climate Indicator (BCI) added to the evidence that growth there is slowing and further justified additional ECB policy support. … German Ifo Survey (Feb.) & GDP Breakdown …
February’s sharp decline in the euro-zone Composite PMI supported other evidence that the region’s recovery has slowed in Q1 and added to pressure on the ECB to provide further decisive policy support at next month’s meeting. … Euro-zone Flash PMIs …
22nd February 2016
Last week, January’s ECB minutes were published, revealing that all members of the Governing Council thought that it was necessary to reconsider the monetary stance. Separately, President Draghi set out two criteria that would inform the Council’s …
19th February 2016
Although Sweden’s headline inflation rate rose by more than expected in January, the upward trend is far from assured. As such, we still see a strong possibility of additional policy easing by the Riksbank later this year. … Swedish Consumer Prices …
18th February 2016
Although Sweden’s headline inflation rate rose by more than expected in January, the upward trend is far from assured. As such, we still see a strong possibility of additional policy easing by the Riksbank later this year. … Swedish Consumer Prices (Jan. …
The adverse reaction to the decision by Sweden’s Riksbank to lower its policy rate further below zero illustrates investors’ concerns about the impact of negative interest rates on banks’ profitability. But we doubt this will deter the European Central …
17th February 2016
In 2015, growth in Norway’s mainland economy slowed to its weakest pace in six years. And low oil prices seem likely to continue to weigh on the economy. We suspect that this will prompt the Norges Bank to loosen monetary policy in March. … Norwegian …
16th February 2016
In 2015, growth in Norway’s mainland economy slowed to its weakest pace in six years. And low oil prices seem likely to continue to weigh on the economy. We suspect that this will prompt the Norges Bank to loosen monetary policy in March. … Norwegian GDP …
Data released on Friday showed that Finland’s economy returned to recession in the second half of last year. We suspect that this will be short lived, but the risks to our already below-consensus GDP growth forecasts lie to the downside. … Finland’s …
15th February 2016
We have argued that both the potential costs and benefits to the UK of leaving the EU would be small over the medium term. But this is not a zero-sum game and while we doubt that Brexit would have any significant benefits for the rest of the EU, the …
Despite the decline in the euro-zone’s goods trade surplus in December, net exports probably increased in Q4 as a whole, raising GDP. Nevertheless, we suspect that net trade will make little contribution to growth this year. … Euro-zone Trade …
There are ominous signs that the turmoil in financial markets is starting to have bigger effects on the euro-zone. While Q4’s GDP figures showed growth maintained its pace at the end of last year, the concerns over euro-zone banks have added to the …
12th February 2016
The fact that euro-zone GDP growth did not slow in Q4 last year provides little comfort in the current environment of global market turmoil and does not preclude the need for further decisive policy action from the European Central Bank. … Euro-zone GDP …
Several financial market indicators are warning of an impending euro-zone recession. For now, even we think that is too pessimistic. But it supports our non-consensus view that growth is set to slow. And if asset prices continue to fall, the probability …
11th February 2016
Today’s decision by Sweden’s Riksbank to cut its repo rate further below zero demonstrated that it is prepared to set aside its worries about a housing market bubble and strong domestic demand in order to respond to very low inflation and policy easing by …
The renewed concerns over the health of the euro-zone’s banks present an awkward policy dilemma for the European Central Bank and further raise the downside risks to the currency union’s economy. … Bank troubles intensify downside risks to …
10th February 2016
