THE ECB HAS ONLY ONE MORE CUT IN IT...
- ...ASSUMING JUST SMALL US TRADE-TARIFF INCREASES
Melanie Debono (Senior Eurozone Economist)Eurozone
- The US confirmed its wish to raise tariffs on imports of EU cars next week; car parts will also be included.
- These hikes, touted in February, are “baked in the cake” for our Q2 GDP baseline; the hit will be small.
- Money and credit data are improving and continue to point to faster EZ GDP growth.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Easing back; unemployment fears still high.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Election result and fiscal stimulus boost sentiment.
Melanie Debono (Senior Eurozone Economist)Eurozone
- The EUR has risen against the USD ever since the EU and German fiscal announcements in March.
- Fundamentals, such as interest rate differentials, point to further strength ahead.
- We look for EURUSD to reach 1.10 at end-2025, and 1.15 at end-2026.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Germany’s IFO business climate index rose in March, mirroring the jump in the PMI…
- ...The surveys still point to recession risk in Q1, after the GDP fall in Q4; we doubt that will be the case…
- ...The surveys have underestimated GDP growth in recent quarters, and are likely doing so again in Q1.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Up thanks to rebound in German manufacturing.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Up less than expected but still consistent with a rebound in GDP.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Rebounding but still pointing to downside risks for GDP in Q1.
Melanie Debono (Senior Eurozone Economist)Eurozone
- The PMI rose a touch in March, and Q1, supporting our expectation for a pick-up in EZ GDP growth…
- ...But the PMI is likely to fall again in April, as higher- tariff announcements weigh on firms’ outlooks.
- Price pressures eased at the end of Q1, paving the way for another ECB rate cut.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Easing political uncertainty didn’t lift spirits in March.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: The end of the road for the SNB’s current easing cycle?
Melanie Debono (Senior Eurozone Economist)Eurozone
- The SNB cut rates for the fifth straight meeting, as expected, taking the policy rate to 0.25%.
- The lack of changes to the decision statement and forecasts means June’s meeting is wide open…
- ...But we maintain that the Bank has more reasons to keep its powder dry than cut again.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: First signs of tariff front running by US firms, but also by EU firms.
Melanie Debono (Senior Eurozone Economist)Eurozone
- EZ trade data show a jump in exports to the US in January, as Mr. Trump fired off tariff threats.
- February and March figures are likely to show further increases in exports across the Atlantic…
- ...But we see some offsetting impact from tariff front-running by EU firms.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Rebounding; likely escaping recession in Q1.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Unchanged from initial estimate; will rebound in March.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Downward revision to HICP rate signals bigger fall in EZ headline in February.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: An increase thanks to German rebound.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Almost reversing the jump in December.
Melanie Debono (Senior Eurozone Economist)Eurozone
