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The continued depreciation of the euro exchange rate points to much-needed increases in export growth and imported inflation in the coming months. But this does not eliminate the risk of deflation and the ECB will remain under pressure to implement …
26th September 2014
The ECB now seems to be taking deflation risks more seriously, implementing surprise interest rate cuts in September and leaving the door wide open to quantitative easing. With the economy apparently weakening further since then and the limited uptake at …
25th September 2014
Finland’s dismal post-crisis economic performance is at odds with the ongoing recoveries of its Nordic neighbours. Although these countries share many characteristics, Finland’s economic decline has been caused by a combination of drivers that is specific …
Although August’s euro-zone monetary data showed further signs of improvement, lending is still contracting and, given the low uptake at the ECB’s first TLTRO last week, there is little sign that this will improve dramatically. … Euro-zone Monetary …
September’s Ifo survey brought further worrying signs that the recovery in the German economy is grinding to a halt and underlined the need for both monetary and fiscal policy to provide further support. … German Ifo Survey …
24th September 2014
The small fall in the euro-zone composite PMI in September added to worrying signs that the region’s economy barely expanded in Q3 after Q2’s stagnation. … Euro-zone Flash PMIs …
23rd September 2014
The low uptake at the first of the ECB’s Targeted Longer-Term Refinancing Operations (TLTROs) last week supported our view that the policy is unlikely to be successful at boosting bank lending. It also suggested that the ECB will struggle to expand its …
19th September 2014
Iceland’s economy contracted in Q2 for the third consecutive quarter, raising questions over the sustainability of the economic recovery. But there are still reasons to believe that its economy will continue to improve steadily. … Iceland GDP …
Iceland’s economy contracted in Q2 for the third consecutive quarter, raising questions over the sustainability of the economic recovery. But there are still reasons to believe that its economy will continue to improve steadily. … Iceland GDP (Q2 …
Ireland’s rapid growth in Q2 underlined its status as the euro-zone periphery’s poster boy but could prompt some concerns that it has entered another unsustainable boom. … Ireland GDP …
18th September 2014
With the first of the ECB’s Targeted Longer Term Refinancing Operations taking place this Thursday,this Update addresses some of the key questions regarding their aims and likely effects. While thepolicy may help some struggling banks, it is unlikely to …
17th September 2014
The agreement amongst European finance ministers over the weekend that Ireland can start early repayment of its IMF loan highlighted again the rapid improvement of market confidence in the peripheral economies that has taken place this year. … Early loan …
16th September 2014
September’s small fall in the German ZEW investor expectations index and thesharper decline in the current conditions index added to evidence that the recovery inthe euro-zone’s largest and strongest economy is petering out. … German ZEW Survey (Sep.) & …
Sweden’s general election yesterday resulted in defeat for the centre-right coalition Alliance Government after two terms in power but produced no overall majority for the centre-left opposition parties. While this will fuel political uncertainty in the …
15th September 2014
The French Government looks set to win a vote of confidence tomorrow, allowing it to pursue long-overdue business friendly reforms. But it could take many years for the reforms to bear fruit and ongoing political turmoil will weigh heavily on consumer and …
July’s euro-zone trade data showed that the region’s exporters continued to struggle,suggesting that the uncertain international environment was taking its toll andoffsetting the benefits of a weaker euro at that point. … Euro-zone Trade …
While signs of pragmatism have recently emerged in the ongoing fiscal debate in the euro-zone, we think there is currently little room for fiscal policy to play much of a role in tackling low growth and inflation. Instead, monetary policy needs to remain …
12th September 2014
July’s rebound in euro-zone industrial production provided hope that industry mayfare slightly better in Q3 than it did in Q2. But with survey data pointing to acontinued slowdown, the sector’s recovery is likely to be very sluggish at best. … Euro-zone …
The Cypriot parliament passed a controversial bill on 6th September, reducing the time it takes toforeclose non-performing business loans and mortgages. While the bill is likely to help banks ahead ofthe ECB’s forthcoming stress tests, it could have a …
10th September 2014
The ECB’s unexpected announcement last week that it would lower interest rates again forced the Danish central bank to reinstate a negative deposit rate to protect the Danish krone’s peg to the euro. But with the ECB likely to take the plunge into …
Unilateral adoption of the euro, which is the currency regime of Montenegro and a number of other countries, might seem to be a potential blueprint for other European countries outside the euro-zone, or for regions/countries seeking independence, such as …
9th September 2014
More favourable terms and conditions for loans to Italian firms point to a possible pick-up ininvestment and industrial production in the coming quarters. However, there is little evidence we willsee a pick-up in consumption. … Looser credit standards may …
8th September 2014
While last week’s cuts in interest rates and details of asset purchase programmes were a welcomesurprise, we still believe that the ECB will eventually have to stop tiptoeing around and take theplunge into a full programme of quantitative easing. … ECB …
5th September 2014
The breakdown of euro-zone Q2 GDP was a bit more encouraging than it might have been, but hardly presented a solid platform for stronger growth ahead. … Euro-zone GDP Breakdown (Q2) & German IP …
The additional policy measures announced by the European Central Bank (ECB) today are unlikely totransform the euro-zone’s economic outlook on their own and therefore look like another step alongthe path to the inevitable adoption of full-blown …
4th September 2014
Sweden’s central bank today left its main policy rate on hold at 0.25% and reiterated that interest rates would not start to rise until late 2015 as it continues its fight to stave off deflation. But we think that the date of the first rate hike will …
Sweden’s central bank today left its main policy rate on hold at 0.25% and reiterated that interestrates would not start to rise until late 2015 as it continues its fight to stave off deflation. But wethink that the date of the first rate hike will still …
August’s fall in euro-zone HICP inflation from 0.4% to 0.3% left it at its lowest rate sinceOctober 2009, when it was negative, and well beneath the ECB’s target of “below, but closeto, 2%”. What’s more, the economy stagnated in Q2 and survey data suggest …
3rd September 2014
July’s fall in euro-zone retail sales provides further signs of a weakening inconsumer spending and, with the final estimates of August’s PMIs revised down,there is more evidence that the region’s recovery may have passed its peak. … Euro-zone Retail …
Switzerland’s economy unexpectedly stagnated in Q2, suggesting that it is feeling theeffects of weakness in the euro-zone, its major trading partner. … Swiss GDP …
2nd September 2014
Fiscal positions strengthened across most of the peripheral economies in July, although we havegrowing concerns about Portugal’s ability to meet its target for this year. (Chart 1). … Euro-zone Fiscal Monitor …
Switzerland’s economy unexpectedly stagnated in Q2, suggesting that it is feeling the effects of weakness in the euro-zone, its major trading partner. … Swiss GDP (Q2 …
August’s flash euro-zone CPI inflation data underlined the absence of price pressures in the currency union and should encourage the ECB to offer stronger hints of additional policy support to come after its meeting next week. … Euro-zone Flash CPI …
29th August 2014
Events last week gave support to our long-held view that the ECB will have to take the plunge and launch a full-blown quantitative easing programme in the coming months. Survey data added to mounting evidence that the recovery has already peaked. And with …
The Danish economy unexpectedly contracted in Q2 as a result of a sharp fall inexports, suggesting that Denmark is feeling the effects of the slowdown in itsbiggest trading partner, the euro-zone. … Danish GDP …
The Danish economy unexpectedly contracted in Q2 as a result of a sharp fall in exports, suggesting that Denmark is feeling the effects of the slowdown in its biggest trading partner, the euro-zone. … Danish GDP (Q2 …
Although July’s euro-zone monetary data showed some further signs of improvement, the bigger picture is that lending is still contracting and the data suggest there is still a significant risk of deflation in the region. … Euro-zone Monetary Indicators …
28th August 2014
The ECB finally seems to be facing facts, withPresident Mario Draghi conceding at Jackson Holethat the economy is too weak and that inflationexpectations have dropped. We do not expect anyaction this month as the Bank clings to the hopethat measures …
August’s larger than expected fall in the EC Economic Sentiment Indicator (ESI)added to worrying evidence that the euro-zone recovery is struggling to gaintraction. … Euro-zone EC Survey …
The latest anti-austerity backlash from within the French Government, together with supportive comments from the ECB, offer hope that the euro-zone’s fiscal straightjacket could be loosened in future. But political turmoil in France bodes ill for the …
26th August 2014
President Draghi’s comments at Jackson Hole supported our long-held view that the ECB will take theplunge into full-blown quantitative easing, probably around the turn of the year. … ECB finally facing …
The latest falls in business confidence and the weakness of euro-zone exports seem to relate partly to the effects of the Ukraine crisis and could therefore be fairly short-lived. But there is a risk that these effects persist or even worsen if the crisis …
22nd August 2014
Q2’s sharp rise in Norwegian GDP made imminent policy action by the Norges Bank look very unlikely. But we still expect the Bank to cut interest rates next year as the krone strengthens further and the recovery slows. … Norwegian GDP …
21st August 2014
Q2’s sharp rise in Norwegian GDP made imminent policy action by the Norges Bank look very unlikely. But we still expect the Bank to cut interest rates next year as the krone strengthens further and the recovery slows. … Norwegian GDP (Q2 …
Iceland’s central bank kept its main interest rate unchanged at 6% at its meeting today but hintedstrongly that rates will need to rise soon. We continue to think that the Sedlabanki will raise thepolicy rate before the end of the year as the slack in the …
20th August 2014
Iceland’s central bank kept its main interest rate unchanged at 6% at its meeting today but hinted strongly that rates will need to rise soon. We continue to think that the Sedlabanki will raise the policy rate before the end of the year as the slack in …
