The latest data suggest that the recovery in euro-zone activity will continue – notwithstanding the uncertainty created by France’s snap election. The euro-zone labour market is tight, with unemployment at a record low and wage growth picking up in Q1. With services inflation a bit stronger than expected in recent months, the ECB looks sure to leave interest rates unchanged at its July meeting before cutting again in September. Elsewhere, we think that the SNB and Riksbank will keep rates on hold at their next meetings, but we expect the Riksbank to resume its easing cycle later this year. Norges Bank will probably only follow suit with rate cuts in December.
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