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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 …
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 …
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
Austria’s banking sector is still struggling with the legacy of the 2008 crisis when its large exposure to Emerging Europe brought it to the brink of collapse. However, in its current state, with banks in stronger positions and lending growth firmly …
21st October 2015
The decline in oil prices has weighed on the Norwegian mainland economy and things could get worse before they get better. But ramped-up policy support from the Government and central bank next year should prevent the economy from falling into a more …
20th October 2015
The ECB’s October Bank Lending Survey (BLS) revealed a slight loosening of credit conditions for firms and stronger demand for loans. It also gave positive signals about the effects of QE on bank lending, which may encourage the ECB to do more. … ECB …
The shift to the right in yesterday’s Swiss election will mean continued resistance to immigration and perhaps more business-friendly policies. But exchange rate developments are more important for the economy and, with upward pressure on the franc likely …
19th October 2015
While in last week’s Budget the Irish Government talked up its proposed tax cuts, the big picture was one of continued fiscal consolidation. All else equal, this will drag on growth. But Ireland’s economy should be strong enough to continue expanding at a …
16th October 2015
August’s euro-zone goods trade data showed that weakening global demand over the summer took a toll on the region’s exporters, causing the trade surplus to fall from a record high. … Euro-zone Trade …
Recent comments from Governing Council members suggest that the ECB may not be ready to increase its policy support when it meets on 22nd October. But President Draghi is likely to reiterate concerns about the inflation outlook and risks from emerging …
15th October 2015
The Greek parliament looks set to pass the next set of reforms needed to unlock further bailout funds and potentially open the door to a debt restructuring. But with yet more reforms needed, the economy set to weaken and debt unsustainably high, Greece …
The improvement in Sweden’s labour market in recent months has exceeded consensus expectations and those of the Riksbank. But conditions are still far from healthy and wage growth remains subdued, suggesting that the unemployment data will not stop the …
The influx of refugees into Germany has caused much speculation about the costs to the government and possible benefits to the economy. But while the trend presents opportunities for the long term, it is unlikely to have a major impact on the public …
Although France’s headline HICP inflation rate held above zero in September, today’s data revealed that price pressures remain exceptionally weak and will add to the growing pressure on the ECB to increase its policy support. … French CPI …
14th October 2015
August’s decline in euro-zone industrial production suggested that the sector is still struggling to grow despite the weaker euro and that it will not be a major driver of the euro-zone’s sluggish recovery. … Euro-zone Industrial Production …
With the periphery’s problems far from over, hopes for the euro-zone’s future rest with the core countries. But neither Germany nor France seem set for an economic transformation and the fiscal union that may be the region’s best chance of future growth …
October’s German ZEW survey confirmed that concerns over the global environment and the scandal at Volkswagen are taking a toll on investor confidence, which might affect economic activity in the months ahead. … German ZEW …
13th October 2015
The small rise in Sweden’s headline inflation rate in September to just above zero may be just about enough to prevent the Riksbank from loosening policy further at the end of this month. But we still expect further action by December. … Swedish Consumer …
The European economy has performed relatively well over recent months amid financial market unrest and signs of a slowdown elsewhere. But the euro-zone’s exporters are still not benefitting from the weakness of the exchange rate as much as had been hoped …
The small rise in Sweden’s headline inflation rate in September to just above zero maybe just about enough to prevent the Riksbank from loosening policy further at the end of this month. But we still expect further action by December. … Swedish Consumer …
Last week’s news on the euro-zone brought the strongest signs yet that some parts of the currency union are starting to feel the effects of the deterioration in the international environment. In particular, German exports and industrial production fell …
9th October 2015
A mixed set of national industrial production data for August from France, Italy and the Netherlands suggested that while euro-zone industry might have fared slightly better in Q3 than it did in Q2, the sector is still struggling. … French, Italian & …
This Focus takes a detailed look at the outlook for Greece after the implementation of its third bailout and concludes that the country’s six-year crisis is far from over. Indeed, a Grexit is still likely at some point, with important ramifications for …
7th October 2015
August’s sharp falls in German and Spanish industrial production suggest that weakness in emerging economies may have caused their GDP growth to slow in Q3. … German & Spanish Industrial Production …
While the re-election of Portugal’s centre-right coalition appeared to be an endorsement of the austerity stance it has taken, its failure to secure a parliamentary majority means that it may struggle to take the tough decisions needed to keep the …
5th October 2015
August’s euro-zone retail sales data suggest that the consumer recovery remained on track. And the final PMIs point to quarterly GDP growth remaining at around 0.4% in Q3. But September’s monthly fall could be a sign of things to come. … Euro-zone …
