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November’s German Ifo survey supported the message from other survey indicators that the economy is still growing at a healthy pace. And the breakdown of Q3 GDP showed that, unusually for Germany, consumers are driving growth. … German Ifo Survey (Nov.) & …
24th November 2015
Comments from the outgoing governor of Ireland’s central bank that he “knows” that there won’t be another housing bubble smack of hubris. While there does not appear to be a bubble in the housing market at the moment, there is still a risk that one …
23rd November 2015
November’s solid rise in the euro-zone composite PMI suggests that the region’s recovery might regain some pace in Q4 after Q3’s slight slowdown. But we doubt that the outlook has improved enough to dissuade the ECB from increasing its monetary policy …
It goes without saying that the loss of life and the social impact of the Paris attacks dwarf any consideration of their economic consequences. But we doubt that the near-term economic impact will be major. Similar tragedies in Madrid and London had only …
20th November 2015
While fiscal authorities may tolerate increased security spending by some governments after the Paris terror attacks, suggestions that Europe’s budget rules will be swept aside are over the top. … Will the Paris attacks loosen Europe’s fiscal …
18th November 2015
Recent suggestions that Italy has gained the most from QE paint a pretty bleak picture of the policy’s effectiveness. As it happens, we are not convinced that Italy has been the biggest winner. Either way, more needs to be done to support growth and raise …
The German ZEW investor survey showed that easing fears about the global environment led sentiment to improve in November and suggested that the Paris attacks have had little impact on sentiment so far. … German ZEW …
17th November 2015
Norway’s oil and gas sector was not as strong in Q3 as the headline GDP data suggest. And growth in the mainland economy slowed. We suspect that this will prompt the Norges Bank to loosen monetary policy early next year. … Norwegian GDP …
Norway’s oil and gas sector was not as strong in Q3 as the headline GDP data suggest. And growth in the mainland economy slowed. We suspect that this will prompt the Norges Bank to loosen monetary policy early next year. … Norwegian GDP (Q3 …
If there were any remaining doubts that the ECB will bow to the growing pressure to provide additional monetary policy stimulus to the euro-zone’s fragile economic recovery, Q3’s disappointing GDP figures should have put them to bed once and for all. … …
13th November 2015
Today’s Italian GDP data were disappointing and we expect the economy to continue to grow at a fairly slow pace. As a result, the government debt-to-GDP ratio is unlikely to fall over the coming years, leaving Italy at risk of a renewed period of market …
Q3’s euro-zone GDP figures confirmed that the currency union’s economic recovery has lost further momentum and sealed the case for more policy support from the ECB. … Euro-zone GDP (Q3 …
Political developments in Spain could not only dampen the country’s previously strong economic recovery but also threaten to re-ignite the euro-zone’s debt crisis. … Just how worried should we be about …
12th November 2015
September’s fall in euro-zone industrial production confirmed that the sector made virtually no contribution to GDP growth in Q3, suggesting that the overall economic recovery is unlikely to have gained pace. … Euro-zone Industrial Production …
The very low rate of inflation in Sweden in October suggests that the Riksbank will need to put any lingering concerns about household debt to one side and increase its monetary policy support in December. … Swedish Consumer Prices …
Although France’s headline inflation rate ticked up in October, price pressures across the euro-zone’s core economies remain very weak, supporting the case for more policy support from the ECB. … French CPI …
The very low rate of inflation in Sweden in October suggests that the Riksbank will need to put any lingering concerns about household debt to one side and increase its monetary policy support in December. … Swedish Consumer Prices (Oct. …
The recent run of surprisingly strong data from Greece does not mean that the economy is out of danger. Not only has some survey evidence painted a much gloomier picture, but the full adverse economic effects of the conditions attached to the new bailout …
11th November 2015
Today’s vote of no confidence in the Portuguese Government seems set to usher in a renewed push against austerity and a further rise in bond yields. The one hope is that mounting public resistance to austerity will at some point lead the European …
10th November 2015
September’s industrial production data from France and Italy added to the evidence that euro-zone industrial growth might have slowed in Q3 from its already weak pace. … French & Italian Industrial Production …
Italy’s labour market has shown some strong signs of improvement since the summer, but we suspect that this is unlikely to last. Reduced tax incentives for hiring, as well as sluggish economic growth, mean that unemployment is only likely to edge down …
9th November 2015
With the composite euro-zone PMI pointing to steady growth and hawkish comments from Fed Chair Janet Yellen pushing the euro down to a four-month low against the dollar, further policy loosening by the ECB might not appear necessary. But the Fed may not …
6th November 2015
September’s unexpectedly sharp fall in German industrial production was a worrying sign that GDP growth may have slowed in Q3 even in the euro-zone’s strongest economy. … German & Spanish Industrial Production …
September’s euro-zone retail sales data suggested that the region’s consumer recovery is starting to run out of steam. … Euro-zone Retail Sales …
5th November 2015
The Norges Bank left its policy rate on hold today, but its loosening cycle is not over. Inflation looks set to fall next year and, as a result, we have pencilled in a 25 basis point cut in March. … Norges Bank policy unchanged, but rate cut likely next …
Swiss CPI inflation held at a record low in October, increasing the likelihood that the SNB will intervene in foreign exchange markets before long to prevent a renewed appreciation of the franc from adding to deflationary pressure. … Swiss Consumer Prices …
Belgium has the highest tax burden on labour in Europe, so measures announced recently aimed at reducing it are a positive step. However, the reforms do not go far enough. Accordingly, over the next few years we expect GDP growth to remain sluggish and …
4th November 2015
Today’s decision by Iceland’s central bank to raise its key interest rates by 25bp does not mark the end of its tightening cycle. A further rate rise is likely at the next meeting in December. … Iceland raises rates and tightening cycle not yet …
October’s rise in the euro-zone composite PMI suggested that the region’s recovery maintained its pace at the start of Q4. But current rates of growth are too slow to put upward pressure on inflation. … Euro-zone Final PMIs (Oct.) & Producer Prices …
Today’s decision by Iceland’s central bank to raise its key interest rates by 25bp does not mark theend of its tightening cycle. A further rate rise is likely at the next meeting in December. … Iceland raises rates and tightening cycle not yet …
Early indications from business surveys suggest that the euro-zone economy has continued to grow at a steady but slow pace at the beginning of the fourth quarter. For example, the composite PMI remains consistent with quarterly growth of 0.4%, similar to …
3rd November 2015
ECB stress tests have offered some comfort about Greek banks’ solvency, but they are not out of the woods. And with a lack of access to cheap funding and depressed deposits seriously restricting banks’ liquidity, weak lending looks set to weigh on …
2nd November 2015
The euro-zone’s peripheral economies appear to have improved their fiscal positions in the year to September. But progress hasn’t been sufficient for most to put their debt ratios on a downward trend. … Euro-zone Fiscal Monitor …
Policymakers at the ECB have seemingly been priming the markets for additional stimulus to be announced in December. With some form of easing now priced into the market, the Bank is under pressure to deliver. We forecast a deposit rate cut and an …
30th October 2015
While the euro-zone avoided a second straight month of falling prices in October, the absence of inflation in the region keeps the pressure firmly on the ECB to expand its QE programme in December. … Euro-zone Flash CPI (Oct.) & Unemployment …
Spain’s economic growth slowed a touch in the third quarter, suggesting that the country’s impressive recovery may be starting to lose a bit of steam. … Spain & Austria GDP (Q3, 1st …
October’s rise in German HICP inflation provided some reassurance that a prolonged period of deflation is not just around the corner. But there is still little sign of underlying price pressures in the euro-zone’s largest economy. … German Flash CPI …
29th October 2015
October’s EC business and consumer survey suggested that the euro-zone’s economic recovery may have gathered some pace at the start of Q4. But it also showed that consumer inflation expectations remained weak, supporting our view that the ECB will need to …
While we have argued for some time that the ECB will expand its asset purchases in December, we now expect it to cut its deposit rate further into negative territory too. This seems unlikely to have dramatic direct effects on economic activity in either …
28th October 2015
The decision by Sweden’s Riksbank to increase the size of its government bond-buying programme was clearly a response to the growing anticipation of more stimulus from the ECB. We think that these pressures will force the Riksbank into doing more as soon …
The dovish stance taken by the ECB in recent weeks has partly reflected its fear that inflation expectations have become unanchored from the near-2% target. Such concerns are justified, supporting expectations of an expansion of the Bank’s QE programme to …
September’s euro-zone monetary data point to low inflation and continued slow growth, which is likely strengthen the conviction of policymakers at the ECB that more stimulus is needed. … Euro-zone Monetary Indicators Monitor …
27th October 2015
Political wrangling in Portugal since its election has again highlighted the difficulty of imposing endless austerity on a weak economy. The fragile new Government will struggle to meet the European Commission’s targets and may collapse before long, …
26th October 2015
October’s German Ifo survey echoed the message from other indicators that growth may be slowing, although the Volkswagen scandal seems to be having little impact on the car industry for now. … German Ifo Survey …
ECB President Mario Draghi surprised many with his very dovish comments at the press conference that followed last week’s ECB Governing Council meeting. But he remained coy about what tools the Bank might use to loosen policy. An interest rate cut looks …
23rd October 2015
October’s rise in the euro-zone composite PMI suggested that the region’s recovery continued at a modest pace at the start of Q4. But the fading boosts from the lower oil price and weaker euro point to slower growth ahead. … Euro-zone Flash PMIs …
While the European Central Bank left monetary policy unchanged today, President Draghi gave even stronger-than-anticipated signals that the QE programme will be expanded in December. … ECB all but promises more support in …
22nd October 2015
