Tag Archives: ECB inflation projections

The ECB’s meeting on 14 December would be a non-event if it were not for two specific points to make clear before the Christmas break – the staff forecasts for inflation, and the not-so-constructive ambiguity on QE horizon. We expect no major surprise from the new staff projections, reflecting the ECB’s cautiously upbeat tone. Euro area real GDP growth forecasts will likely be revised higher for the fifth...

At the 14 December meeting, attention will be focused on the ECB staff forecasts and any changes in communication on plans for unwinding QEs. The main talking points ahead of the ECB’s last policy meeting this year on 14 December are the new staff projections for growth and inflation as well as forward guidance on asset purchases. We expect higher oil prices to push ECB staff forecasts for inflation higher, to 1.4% in 2018 and 1.6% in 2019. A lower...

GDP figures confirming a strong and steady expansion have yet to turn up in core inflation data.According to preliminary Eurostat estimates, euro area real GDP increased by 0.6% q-o-q in Q3, slowing marginally from an upwardly-revised 0.7% in Q2. A breakdown by expenditure components will not be released until 14 November, but domestic demand was likely the key driver in the euro area’s solid momentum.At a country level, France and Spain are the first of the big four euro area economies to...

The threat to the ECB’s inflation targets posed by the appreciation of the euro is being offset by strengthening growth in the euro area. The ECB should pursue its cautious exit strategy.The trade-weighted EUR has appreciated by 4.8% since the ECB’s June meeting. ECB models and Mario Draghi’s rule of thumb suggest that a stronger currency could lower euro area inflation by about 30-40bp in 2018-2019, all else being equal.But all else is not equal, and the euro area economy is in a very...

While core inflation was slightly stronger than expected in June, we believe it will rise only slowly for the rest of this year.Euro area ‘flash’ HICP inflation eased to 1.3% y-o-y in June (down from 1.4% in May) while core inflation increased to 1.1% (up from 0.9% in May). Both figures were slightly above consensus expectations, but our overall assessment is unchanged. The bottom line from the June inflation report is that the broad picture remains unchanged – we continue to expect euro...

Although flash inflation was down in May, we expect core prices to pick up gradually and the ECB to move very cautiously toward policy normalisation.Euro area ‘flash’ HICP inflation came in at 1.4% y-o-y in May (down from 1.9% in April) while core inflation eased to 0.94% (down from 1.2%), both slightly below consensus expectations, as energy-related base effects and Easter distortions faded. We forecast euro area inflation to remain relatively stable in the next few months before core...