Filtered by Region: Europe Use setting Europe
Despite the hawkish rhetoric from central bankers on both sides of the Atlantic, we still expect most long-dated government bond yields in developed markets (DM) to fall over the next couple of years. After a surprisingly hawkish message from the FOMC …
21st September 2023
Note: We’ll be discussing September’s Fed, ECB and Bank of England policy decisions in a Drop-In at 3pm BST today. Register here to join. The surprise decision by the Bank of England to leave interest rates unchanged at 5.25% today probably means that …
CBRT sticks to the course with 500bp hike Turkey’s central bank delivered a 500bp interest rate hike at today’s meeting, to 30.00%, providing further encouragement about policymakers’ commitment to tackling the inflation problem. A lot more tightening …
The Bank’s job is done The surprise decision by the Bank of England to leave interest rates unchanged at 5.25% today probably means that rates are already at their peak. We think rates will stay at this peak of 5.25% for longer than the Fed, the ECB and …
The SNB’s decision to keep rates unchanged at 1.75% was a surprise. Although the Bank left the door open for further hikes, we think rates are now at their peak. And with inflation set to fall further, we expect the SNB to start cutting rates next year. …
Following today’s rate hikes, the Riksbank and Norges Bank are now at, or close to, the end of their tightening cycles. Both central banks’ new projections suggest that they are more likely than not to raise rates one more time. But whether or not they …
Early signs of a recovery Poland’s retail sales and industrial production figures for August suggest that the economy may be at the early stages of a recovery, but we still expect overall GDP growth to be relatively tepid in the near term. We think that …
Norges Bank and Riksbank nearly done with rate hikes Following today’s rate hikes, the Riksbank and Norges Bank are now at, or close to, the end of their tightening cycles. Both central banks’ new projections suggest that they are more likely than not to …
SNB goes for a hawkish pause, but we think rates have peaked. The SNB’s decision to keep rates unchanged at 1.75% was a big surprise, although it left the door open for further hikes. We do not expect any further increases in the policy rate as we expect …
This page has been updated with additional analysis since first publication. Note: We’ll be discussing September’s Fed, ECB and Bank of England policy decisions in a Drop-In at 3pm BST today. Register here to join. A bit more wiggle room for pre-election …
Our Emerging Europe Chart Pack has been updated with the latest data and our analysis of recent developments. Russia and Turkey had a strong first half to the year, but large policy tightening is likely to result in a sharp slowdown in 2024. Inflation …
20th September 2023
This page has been updated with additional analysis since first publication. Easing in services inflation may mean BoE halts rate hikes…after tomorrow Note: We’ll be discussing September’s Fed, ECB and Bank of England policy decisions in a Drop-In on …
Our forecast that the Bank of England won’t start cutting interest rates until the second half of 2024 means mortgage rates are likely to stay between 5.5% and 6.0% until mid-2024. While transactions volumes have only seen a modest decline so far, we …
19th September 2023
The problems of WeWork, which have intensified in recent months, do not look reflective of significant distress in the wider flexible office market. However, flex has yet to see much of a boost from greater hybrid working and may not be immune from …
Overview – A slower fall in core inflation than in the US or the euro-zone will mean that the Bank of England keeps interest rates on hold at the probable peak of 5.50% for longer than the US Fed or the ECB. But our non-consensus forecast that higher …
18th September 2023
There’s a lot of uncertainty about how much impact monetary tightening has had in the global economy so far, but in Central and Eastern Europe (CEE) the hit to households has already been significant and we estimate that almost all of the impact from …
We were not surprised that European Commission (EC) President Ursula von der Leyen announced in her State of the Union address this week that the EC will launch an anti-subsidy investigation into electric vehicle (EV) imports from China. Indeed, we had …
15th September 2023
Russia seeking closer friendship with North Korea The strengthening relationship between President Putin and North Korean leader Kim Jong Un was on show this week but we doubt the discussions will yield any meaningful benefits for Russia’s economy or …
Note: We’ll be discussing September’s Fed, ECB and Bank of England policy decisions in a Drop-In at 3pm BST on Thursday 21st September. (Register here .) We’ve been surprised by the resilience of the labour market over the past year. More recently, …
CBR delivers another large hike, more tightening still in the pipeline Russia’s central bank (CBR) raised its policy rate by 100bp, to 13.00%, at today’s meeting and with the ruble likely to remain under pressure and inflation pressures to keep building, …
We think the euro-zone economy will go into recession in the second half of 2023, and the subsequent recovery will be weak due to the lagged impact of monetary policy tightening as well as tight fiscal policy. Headline inflation in the euro-zone will …
We think Norges Bank will go through with its plan to raise its policy rate by 25bp next week, to 4.25%, and signal that its tightening cycle is over. It is then likely to will wait until around the middle of next year before cutting interest rates, but …
Given our dovish view of monetary policy in Emerging Markets (EMs) – and our increasingly less bearish view of the US economy – we think that EM local-currency government bond yields will fall across the board in the next couple of years, particularly in …
14th September 2023
The Riksbank looks all but certain to follow the ECB’s example and raise its key policy rate by 25bp next week, to 4.0%. However, while that could mark the end of its tightening cycle, on balance we think It is more likely to deliver one last hike, in …
On balance, we think the SNB will look through the recent low inflation and hike rates by 25bp one last time to 2.00%, given policymakers’ previous hawkish commentary. But with the economy stagnating in Q2 and wage growth suppressed, we would not be …
We think that the ECB is more likely than the Fed to keep rates “higher for longer”, even as the euro-zone heads for a recession. That is one reason why we expect core euro-zone bond yields to fall by less than Treasury yields over the next year or so, …
Today’s 25bp rate hike by the ECB probably brings its tightening cycle to an end. Given our view that underlying inflation will ease only gradually even though the euro-zone is heading for a recession, we think policymakers will leave rates at this record …
End of the tightening cycle The ECB’s decision to raise interest rates by a further 25bp today probably brings the current tightening cycle to an end. But given the strength of underlying inflation, we expect rates to remain at this level for at least a …
We’ll be discussing September’s Fed, ECB and Bank of England policy decisions in a Drop-In at 3pm BST on Thursday 21 st September. (Register here .) Final 25bps hike to 5.50% to be followed by rates staying at their peak until late in 2024 Bank may …
Big fall in Swedish inflation won’t stop Riksbank hiking Although the drop in the Riksbank’s target measure of inflation in August was bigger than the consensus had anticipated, it will not prevent policymakers from raising its key policy rate by another …
Depressed activity remains consistent with falling house prices The further deterioration of the RICS survey figures in August suggest the peak in mortgage rates seen in July are continuing to dampen demand. And as we don’t think rates will fall …
This page has been updated with additional analysis since first publication. Sizeable fall in July marks beginning of downward trend Euro-zone industrial production fell in July and we think it will continue to do so over the remainder of the year in the …
13th September 2023
Over the last year or so, spreads over sovereign yields have narrowed to their lowest since the euro-zone debt crisis. But while these are expected to widen again over the next year, mostly thanks to falling bond rates, they look set to stay well below …
This page has been updated with additional analysis since first publication. Recession may have begun The 0.5% m/m fall in real GDP in July (consensus and CE forecasts both -0.2% m/m) could possibly mean that the mild recession we have been expecting has …
When the ECB Governing Council announces the results of its operational review later this year, it is likely to say it will continue to use the deposit rate as its key policy tool . We also expect the ECB to establish a new framework for lending reserves …
12th September 2023
After a strong 2022, annual office rental growth has slowed in Italy in H1 2023. And given the contraction in employment we are forecasting, together with increased supply, we think prime rents will largely stagnate both in Milan and Rome until 2025. …
The Q2 Mortgage Lenders and Administrators statistics showed that higher rates are limiting lending and making it more difficult than ever for single-income households to get onto the housing ladder. Meanwhile, arrears took a step up as another cohort of …
Little sign of the economy slowing Industrial production softened a touch in Turkey in July but retail sales continued its recent run of strength and adds further support to the view that the economy is not yet slowing in response to the recent policy …
This page has been updated with additional analysis since first publication. Strong wage growth suggests the Bank will raise rates further The tightness of the labour market continued to ease in July. But the further rise in wage growth will only add to …
Core inflation edges down but Norges Bank to raise rates next week Norway’s inflation rate came in broadly in line with the Norges Bank’s expectations in August, suggesting that policymakers will go ahead with their plan to raise rates from 4.0% to 4.25% …
11th September 2023
Inflation still some way from its peak The further rise in Russian inflation to 5.2% y/y in August is a sign that the economy is bumping up against capacity constraints and we think it will continue to increase over the coming months. The central bank …
8th September 2023
It’s no surprise that the reverberations from the revisions to GDP announced by the Office for National Statistics (ONS) last week continued into this week because the upward revisions were so big. As we noted at the time, we estimate that the level of …
Christine Lagarde and her colleagues will have some new and gloomy data releases to contemplate when they gather in Frankfurt next week. First, revised data published on Wednesday show that the euro-zone eked out only a 0.1% increase in GDP in Q2 as …
Market implied rates suggest that investors expect inflation to normalise in the US and Europe in the next couple of years. While we share that view, we think they are overestimating the level of policy rates required to achieve inflation targets. As a …
The recent rise in oil prices to $90 per barrel means CPI inflation is likely to rise from 6.8% in July to 7.1% in August, but it won’t prevent inflation falling to the 2% target by the middle of next year. Even if oil prices climbed to $100 per barrel, …
The decision by the National Bank of Poland (NBP) to kick off its easing cycle this week with a much larger-than-expected 75bp interest rate cut has been heavily criticised, and suggests to us that policymakers are underestimating the challenge of …
