Strong GDP & inflation not enough to prevent 50bp cut

The stronger-than-expected euro-zone GDP and inflation data released this week, as well as some comments by ECB policymakers, poured some cold water on expectations that the ECB might accelerate the pace of easing. However, we think that, by the time of the December meeting, renewed economic weakness and well-behaved inflation will convince the ECB to cut the deposit rate by 50bp. Next week, we expect the Riksbank to cut its policy rate by 25bp, to 3.0%, and Norges Bank to keep its own policy rate at 4.5%.