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The Norges Bank has clearly become more concerned about threats to financial stability, but we do not think that this will prevent it from cutting the policy rate to zero by the end of the year. … Will financial stability concerns prevent Norges Bank rate …
30th March 2016
February’s euro-zone monetary data suggest that December’s interest rate cut by the ECB had only a small effect. While the Bank has since increased its stimulus, we doubt that this will boost money and lending growth significantly. … Euro-zone Monetary …
29th March 2016
Although the French economy appeared to make a decent start to the year, surveys published this week supported our view that the recovery’s underlying momentum will remain very weak. And the Government’s watered-down labour market reform bill will …
24th March 2016
Any economic effects of last week’s tragic terrorist attacks in Brussels clearly pale into insignificance compared to the loss of life and social consequences. But the direct economic impact seems likely to be quite small. Otherwise, survey data …
The shift away from growth-sapping austerity in the euro-zone is encouraging. But while fiscal policy may no longer be a drag on economic growth, the planned loosening is unlikely to provide a meaningful boost to the recovery and thereby transform the …
23rd March 2016
The prospect of ECB corporate bond purchases is already having a positive effect on firms’ financing costs. But we don’t think that this will be enough to generate a meaningful recovery in investment. … Are ECB corporate bond purchases a …
Greece and its creditors have reached some compromises that might allow the first bailout review to be concluded next month and negotiations over debt relief to begin. But the growing financial and political costs of the refugee crisis are another …
22nd March 2016
The euro-zone PMI and German Ifo and ZEW surveys for March suggest that the slowdown in activity seen at the start of the year has eased, but the surveys still point to only modest growth in Q1 as a whole. … Euro-zone Flash PMIs, German Ifo & ZEW …
We do not think that the recent strengthening of the euro is the result of a change of tactics from the ECB, away from trying to manage the exchange rate towards attempting to boost domestic demand. Nevertheless, if it is sustained , the stronger euro …
18th March 2016
The growing unease over the potential impact of negative interest rates suggests that Sweden’s Riksbank will think twice about cutting the repo rate further below zero. It can draw on other policy measures so it is not yet out of options. But its …
17th March 2016
January’s euro-zone goods trade data showed that export growth slowed again at the start of 2016, suggesting that the previous small boost from the weaker euro has faded. We expect the region’s trade surplus to narrow further this year. … Euro-zone Trade …
The lack of upward pressure on the franc following the last ECB meeting has allowed the Swiss National Bank (SNB) to leave policy on hold for now. But deflation dangers are particularly severe in Switzerland and we suspect that the Bank has more work to …
We think that today’s interest rate cut by the Norges Bank will be followed by another 25bp reduction in June. But concerns about household debt will prevent further loosening beyond that. … Norges Bank cuts rates, but concerns about debt …
Despite its latest policy loosening, the ECB’s behaviour over recent years has been consistent with an inflation objective of closer to 1% than 2%. This has depressed economic growth and increased the risk of the euro-zone sliding into a deflationary …
16th March 2016
Iceland’s central bank decided today to keep its key interest rates unchanged for the third meeting in a row, citing low global inflation and a strengthening currency. But with inflationary pressures building and the economy growing strongly, more rate …
While the distribution of helicopter money in the euro-zone is not a likely near-term measure, the lesson of recent years is that seemingly unimaginable policies can become reality. And it may suit the ECB to keep the idea hovering. … Is the ECB about …
15th March 2016
The latest changes to its lending operations mean that the ECB will now pay commercial banks to lend to the wider economy. But we still suspect that they will be unwilling to take the associated risks and with firms and households reluctant to borrow, …
The renewed fall in Sweden’s inflation rate in February was largely down to movements in energy prices. But with underlying price pressures still largely absent, the Riksbank may well need to take further policy action. … Swedish Consumer Prices …
The renewed fall in Sweden’s inflation rate in February was largely down to movements in energy prices. But with underlying price pressures still largely absent, the Riksbank may well need to take further policy action. … Swedish Consumer Prices (Feb. …
January’s strong rise in euro-zone industrial production was probably just a blip. Survey evidence suggests that the sector remains too weak to prevent the region’s economic recovery from slowing this year. … Euro-zone Industrial Production …
14th March 2016
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 …
