In one line: A poor finish to 2024, but probably not as bad as initially reported.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- We now see EZ headline inflation unchanged at 2.4% in January, with a 0.1pp dip in the core, to 2.6%.
- Selling price expectations are rising in Germany and France, but core inflation will dip further in Q1.
- Is the consumption recovery in the Eurozone finally kicking in? We think so.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: GDP growth slowed at end-2024 despite continued strength in the labour market. ESI points to better times ahead.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: A drop, as expected, but the details point to robust domestic demand.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The ECB eased policy further, as expected, but it is now likely closer to neutral than markets think.
- EZ GDP stagnated in Q4, held back by declines in the two largest economies, Germany and France.
- The first national inflation figures for January lead us to raise our call for EZ core inflation, due out today.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Ignore headline fall; M1 growth is still accelerating.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Poor, but far from conclusive for consumption growth in Q1.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: A rebound, but still subdued overall.
Claus Vistesen (Chief Eurozone Economist)Eurozone
ECB HAS FURTHER ROOM TO EASE POLICY...
- ...BUT WE ARE CLOSER TO NEUTRAL THAN MARKETS BELIEVE
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Rising political uncertainty likely contributed to tightening credit standards in Q4…
- …But we need more data to tell whether this is the start of a sustained shift; we doubt it.
- French consumer confidence rebounded in January but still signals upside risk to unemployment.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Great, but beware the likely seasonal boost in services.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Downturn stalled, but no upturn in sight.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: New year relief, but still subdued.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The ECB will cut its deposit rate by 25bp this week; discussions on the level of neutral will intensify.
- Upside risks to energy, downside risks to the core in the national CPI and HICP data this week.
- EZ PMIs firmed in January, supporting our call for stronger EZ GDP growth in the first quarter.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Poor, but details better than the headline.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Polls are little changed in Germany; a grand coalition between CDU/CSU and SPD still looks the best bet.
- The debt brake is ripe for change, but what is the best way to loosen Germany’s fiscal rules?
- AFD’s support is rising; is a two-party coalition with the CDU/CSU an outsized risk?
Claus Vistesen (Chief Eurozone Economist)Eurozone
- A US move to use energy as a bargaining chip in trade negotiations would send EZ prices higher.
- The Greenland question could inadvertently spark a trade war between the EU and the US.
- Mr. Trump’s pledge to end the war in Ukraine quickly is a key test case for America’s NATO commitment.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Upside risks building in energy, but the Q1 core looks benign on our forecasts.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Upside risks are building for EZ energy inflation in January due to rising oil prices and one-off effects.
- Our Q1 core inflation forecasts are lower than the ECB’s, but we’re in line on the headline.
- We still see three more 25bp rate cuts this year, but risks are now tilted towards two.
Claus Vistesen (Chief Eurozone Economist)Eurozone
