- The ECB will cut its policy rates by 25bp, but the argument for further easing is now much tougher.
- February inflation data mean the ECB’s forecast for Q2 inflation at 2.1% is now a Hail Mary.
- ECB doves will focus on downside risks to growth and employment from tariffs; they have a point.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Consistent with a below-consensus EZ print on Monday.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Consistent with the national CPI undershooting the consensus.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Inflation pulled lower by energy, but the core softened too; setback in spending after a strong finish to 2024.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Upturns in real M1 growth and credit impulse continue.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Decent headline, but rising unemployment fears is a red flag.
Claus Vistesen (Chief Eurozone Economist)Eurozone
RISKS TO OUR HAWKISH ECB CALL ARE FOR LESS EASING...
- ...ASSUMING ONLY SMALL US TRADE TARIFF INCREASES
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Stung by plunge in net exports; consumption is now growing, but weakly.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The failure of FDP and BSW to reach 5% paves the way for a CDU/CSU and SPD coalition in Germany.
- Germany’s new government has its work cut out; fiscal reform and defence are at the top of the list.
- EZ inflation rose in January, but a sharp fall in energy inflation will pull the headline down in February.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: A local high, but still no perfect landing at 2%.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Ugly crash in the services PMI is a fluke, we hope
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The upturn in the EZ PMIs stalled in February, due to a plunge in the French services index.
- Near-term outlook for services output is still decent, and the PMIs signal green shoots in industry, again.
- ECB hawks will focus on rebounding services prices; doves will note weak French labour-market data.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Europe will need to raise annual defence spending by €250B-to-450B over the next eight years.
- A joint EU financing programme for defence is coming; it could be a big package, close to €1T.
- Inflation and a low multiplier will eat up most of the boost to real GDP from rising defence spending.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Revisions in healthcare lifts CPI inflation from initial estimate.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Political uncertainty is soaring in Europe, but EZ equities have never felt better; what’s up?
- We think markets are betting on another Hamiltonian moment in Europe, this time on defence policy.
- Europe will rise to the challenges it faces, but have markets bought into the hype too strongly?
Claus Vistesen (Chief Eurozone Economist)Eurozone
- A peace deal or ceasefire in Ukraine is unlikely to drive near-term relief in Eurozone energy prices.
- The EZ GDP growth slowdown in Q4 was smaller than previously thought...
- ...And EZ productivity growth picked up; or did it? Our ECB call is unchanged either way.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Soft in CPI, but the core HICP is sticky, and selling prices are rebounding.
Claus Vistesen (Chief Eurozone Economist)Eurozone
