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Although Iceland’s central bank decided today to keep its key interest rates unchanged again, upward inflation pressures and domestic economic strength mean that rate hikes are likely later this year. … Icelandic rates on hold but more policy tightening …
10th February 2016
December’s weak industrial production data from France and Italy showed that the sector is still struggling and add to the risk that euro-zone GDP growth slowed in Q4. … French & Italian Industrial Production …
December’s shockingly weak industrial production figures suggest the German economy barely grew in Q4 and pile further pressure on the ECB to match its dovish words with decisive action at its March policy meeting. … German Industrial Production & Trade …
9th February 2016
The European Commission made only minor concessions to the Portuguese Government over its 2016 Budget and the pace of fiscal consolidation will still be faster this year than last. This suggests that other euro-zone governments’ attempts to resist …
8th February 2016
Denmark’s large current account surplus should narrow in the coming years as the economic recovery there takes hold, but it will not disappear entirely. This will sustain the upward pressure on the krone’s peg to the euro, underlining the need for …
The latest fiscal data suggest that the euro-zone’s peripheral economies generally improved theirbudgetary positions last year. But, with the exception of Ireland, their public debt is not yet falling asa share of GDP. … Euro-zone Fiscal Monitor …
Euro-zone consumer price inflation looks likely to pick up later this year, driven by the fading direct effect of lower oil prices and the feed-through of previous falls in the euro to consumer prices. But these effects should be temporary. The indirect …
5th February 2016
Having succeeded in bringing the euro down sharply last year, the European Central Bank (ECB) has recently fallen behind in the race amongst global policymakers to weaken their currencies in order to boost growth and stave off deflation. Only very bold …
4th February 2016
Hard data for the fourth quarter of last year, including GDP estimates for some countries and industrial production and retail sales figures for the region as a whole, suggest that euro-zone GDP posted a quarterly gain of just 0.3%. This would be the same …
3rd February 2016
Given the political turbulence after recent elections in Spain and Portugal, there are some concerns about the potential outcome of the Irish election, now scheduled for just three weeks’ time. But the Irish economy should be better able to cope with any …
December’s euro-zone retail sales data suggest that the consumer sector lost some steam at the end of last year. And the final PMIs for January added to the evidence that the wider recovery had a slow start in 2016. … Euro-zone Retail Sales (Dec.) & Final …
December’s fall in euro-zone unemployment was encouraging, but the rate remains too high to boost wage growth. And the still deeply negative rate of producer price inflation points to more deflationary pressure in the pipeline. … Euro-zone Unemployment & …
2nd February 2016
The decline in oil prices and inflation has probably had a more positive impact on the euro-zone economy than expected as the region’s consumers have spent their windfalls. But as the oil boost fades, policymakers will need to provide other sources of …
1st February 2016
President François Hollande’s declaration in a speech earlier this month that France is in a “state of economic emergency” was hardly reassuring. But, if it’s even possible, we would actually argue that the situation is even more worrying. The French …
29th January 2016
January’s small rise in euro-zone CPI inflation presents no impediment to decisive additional policy loosening by the European Central Bank (ECB) at its next meeting in March. … Euro-zone Flash CPI …
December’s euro-zone monetary data suggested that money and lending growth in the currency union has peaked, adding to the case for the ECB to loosen monetary policy significantly in March. … Euro-zone Monetary Indicators Monitor …
Provisional Q4 GDP data from France, Spain and Austria suggested that the euro-zone’s modest economic recovery is unlikely to have gathered steam in the final quarter of last year, providing a weak platform for growth in 2016. … France, Spain & Austria …
January’s German CPI data revealed a slight rise in inflation following weather-related weakness in December. But while the rate is set to rise further in the months ahead, underlying inflation pressures remain weak enough to warrant further ECB action. …
28th January 2016
January’s EC consumer and business survey supported the message from other survey indicators that the euro-zone’s economy slowed at the start of the year. … EC Business & Consumer Survey …
Even a very sharp slowdown in China would not be enough on its own to push Germany into recession. But if, contrary to our forecasts, a slowdown in China prompted a more generalised slowdown in global demand, this would hit the German economy very hard. …
27th January 2016
January’s German Ifo survey brought the strongest signals yet that the recent global economic concerns and associated financial market gyrations have started to hit the euro-zone’s biggest economy. … German Ifo Survey …
25th January 2016
We said after December’s “Draghi disappointment” that we would take future verbal policy steers from the ECB with a healthy pinch of salt. But there are some good reasons to expect the President and colleagues to follow through on their latest dovish …
22nd January 2016
January’s decline in the euro-zone Composite PMI suggests that the economy got off to a slow start this year. With the twin boosts from previous sharp falls in oil prices and the euro set to fade, a further slowdown is on the way. … Euro-zone Flash PMIs …
The ECB signalled firmly today that further policy loosening is imminent. While we are wary of putting too much faith in its communications after last month’s disappointment, there are good reasons to expect it to cut interest rates and accelerate its …
21st January 2016
There would appear to be a good chance that Greece will pass the first formal review of its third bailout programme. But nothing is certain and even a successful outcome won’t necessarily mark the beginning of the end of Greece’s six-year long crisis. … …
19th January 2016
January’s German ZEW survey confirmed that recent turbulence in global financial markets and the soft tone of the domestic hard data have dented investor sentiment. … German ZEW …
Swiss exports have performed better than we had feared in the year since the SNB abandoned its currency ceiling. But the franc’s strength has probably yet to take its full toll on exports and the extra deflationary pressure that it has caused could have …
18th January 2016
The disconnect between the surveys and the official data for Q4 became ever clearer last week, with the release of disappointingly weak November industrial production figures. While the surveys were probably too upbeat and the hard data too gloomy, it now …
15th January 2016
The euro-zone goods trade surplus rose in November, suggesting that exports might have added to GDP growth in Q4. Nevertheless, we suspect that net trade will make little contribution to growth this year. … Euro-zone Trade …
The Swiss National Bank’s (SNB) shock decision to abandon its ceiling for the franc reflected its judgement that the policy was just not sustainable. Unless it can reverse the franc’s appreciation with other policies, the downward impact on growth and …
After disappointing markets in December, we expect the ECB to indicate at its forthcoming meeting that the door is still open to bolder policy support. The Bank is unlikely to alter policy for now given the firm tone of recent survey data and the damage …
14th January 2016
The very low rate of inflation in Sweden in December underlines the absence of price pressures and will encourage the Riksbank to follow through on last week’s announcement that it was prepared to intervene in the currency market. … Swedish Consumer …
While the euro-zone economy ended last year with some momentum, expectations of a further acceleration in growth in 2016 will be disappointed. The boost to consumer spending from the decline in oil prices and inflation will fade, while export growth is …
13th January 2016
November’s fall in euro-zone industrial production added to evidence that the economy performed worse in Q4 than the surveys have implied and perhaps even failed to match Q3’s modest 0.3% expansion. … Euro-zone Industrial Production …
Although France’s headline inflation rate edged up in December, the big picture is that price pressures in the euro-zone’s second-largest economy remain very weak. … French Consumer Prices …
Perhaps the most notable positive surprise in the euro-zone last year was the strength of household spending. Spending looks likely to have expanded by 1.5% or more in 2015. This would be the strongest increase since 2007 and account for almost all of …
8th January 2016
November’s disappointingly weak German and French industrial production figures provided further evidence that the hard data on the euro-zone economy is failing to live up to the more optimistic picture painted by the surveys. … German & French …
December’s EC Business and Consumer Survey added to evidence that euro-zone GDP growth accelerated in Q4, but the consumer recovery seems to be losing pace. … Euro-zone EC Survey (Dec.), Unemp. & Retail Sales …
7th January 2016
Sweden’s Riksbank is likely to have to follow through on its pledge to intervene in the foreign exchange market. But the strength of the domestic economy and the likelihood of more ECB QE means that it will probably only be able to stem the krona’s …
The small rise in the euro-zone’s Composite PMI for December suggested that the region’s recovery may have gained a little pace in the final quarter of 2015. But GDP growth is still too slow to provide a meaningful boost to core inflation. … Euro-zone …
6th January 2016
December’s euro-zone consumer price inflation rate of +0.2% left an average inflation rate for 2015 as a whole of zero – the lowest rate since the single currency was formed. Headline inflation will almost certainly rise during 2016 as negative energy …
5th January 2016
December’s weaker-than-expected euro-zone consumer prices figures supported our view that bolder ECB policy action will ultimately be needed to bring inflation back to target on a sustained basis. … Euro-zone Flash CPI …
The latest fiscal data suggested that the peripheral countries continued to improve their budgetary positions at the back end of 2015. But there is a distinct risk of fiscal slippage in 2016, particularly in Spain and Portugal following their recent …
4th January 2016
December’s German CPI data confirm that the relative strength of the economy is exerting no upward pressure on inflation and support our view that the ECB will need to do more to hit its inflation target for the region as a whole. … German Flash CPI & …
The recent pick-up in German wage growth is encouraging and we think that fears of a sharp rise in inflation and loss of competitiveness are unwarranted. Our one misgiving is that the ECB might respond to modest inflationary pressure in Germany by …
23rd December 2015
