ECB won’t be micro-managing the bond market

In today’s ECB press conference, Christine Lagarde did not seem fazed by the recent rise in bond yields or the evidence of tighter bank lending conditions. But we suspect that policymakers will push back against further increases in yields until next year when the economic recovery is on a firmer footing.
Jack Allen-Reynolds Senior Europe Economist
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European Economics Update

Rising gas prices will hit Spain hardest

The upward pressure on euro-zone headline inflation from the surge in natural gas prices will not be felt evenly throughout the region, with Spain looking most vulnerable. Governments are stepping in to cushion the blow, but higher energy bills are a downside risk to the euro-zone’s consumer recovery.

20 September 2021

European Economics Weekly

Wage growth to stay weak, inflation to keep rising

Data published this week highlight the challenge to euro-zone consumers from subdued pay growth and rising inflation. We expect inflation to keep rising in the coming months, and probably further than most expect. Next week, we will host a Drop-in webinar on the causes and effects of the recent surge in European gas prices.

17 September 2021

European Data Response

Euro-zone Final HICP (Aug.)

Rising costs – from shipping to energy – are likely to push euro-zone inflation up even further in the coming months. They might also mean that it doesn’t fall quite as quickly next year as we currently assume. But by the end of 2022, we still suspect that inflation will be a long way below the ECB’s target.

17 September 2021

More from Jack Allen-Reynolds

European Data Response

Euro-zone Retail Sales (May)

Euro-zone retail sales rose back above their pre-pandemic level in May. And as Covid restrictions continue to be lifted, spending in the services sector is recovering very rapidly, which will provide a significant boost to household consumption and GDP.

6 July 2021

European Data Response

Euro-zone Flash PMIs (June)

The further strengthening of the euro-zone Composite PMI to a 15-year high in June underlines that the economy is rebounding quickly. Alongside this recovery, price pressures are continuing to build. But we still think that they will fade in 2022.

23 June 2021

European Data Response

Euro-zone Hourly Labour Costs (Q1)

Average hourly labour cost growth slowed in Q1, and we expect wage growth to remain subdued over the coming years. This will keep underlying inflationary pressures down.

16 June 2021
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