Synchronised recovery makes the ECB’s job easier

The euro-zone’s economic growth is unusually synchronised across the region. Economies in the core continue to do well, while previously-struggling countries like Italy and Portugal are growing again. This makes it less likely that a crisis will erupt in a peripheral economy and spread to the core, which in turn should make the ECB more confident that the recovery will be sustained. As such, we think that the synchronised economic recovery increases the likelihood that the Bank will taper its asset purchases next year. It is most likely to make this announcement in October. After all, the minutes of July’s monetary policy meeting reiterated that the Governing Council will discuss the outlook for monetary policy in more detail in the autumn. So we don’t expect any fireworks from President Draghi during his speech next week at Jackson Hole.