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The least bad option for the ECB could just be to leave the threat of lower rates hanging in the air while hoping that actually delivering on the threat might not be needed. With a few exceptions, the recent history of ECB easing has been marked by episodes of lengthy bouts of verbal interventions, preparing the ground for actual decisions once a consensus has been reached. Several reasons can be found for the ECB’s slow responsiveness to changes in the macro-financial environment,...

We believe that y-o-y core CPI inflation will remain relatively stable over the coming 6-9 months. Year-on-year headline inflation fell back to zero in September, but core inflation inched up from +1.8% in August to +1.9% in September. The slack in the labour market is diminishing rapidly, and deflation is not really posing a risk in the US. However, with a higher dollar and inflation low worldwide, we believe core inflation will remain relatively stable over the coming months. The...

We are leaving unchanged our euro area real GDP growth forecast of 1.5% for 2015 as a whole. In the euro area, industrial production (excluding construction) dropped by 0.5% m-o-m in August, in line with consensus expectations (0.5%). The July figure was revised marginally up by 0.2 percentage points to 0.8% m-o-m. However, despite August’s decrease, industry is still likely to have fared better in Q3 (+0.3% q-o-q for July-August as a whole) than it did in Q2, when production fell by...

The scandal that has engulfed the VW Group had a big impact on both platinum and palladium as both metals are used in catalytic converters in vehicles. VW’s deceptive practices as regards the real level of nitrogen oxide (NOx) emissions from its diesel vehicles have highlighted the un-ecofriendly features of diesel-powered cars, which can be expected to hit demand. It is also likely to boost the chances of stricter environmental standards on NOx exhaust emissions being pushed through in...

Today’s data on August’s consumer spending were strong, and data for the previous months were revised up. We now expect consumption growth to reach some 3.3% in Q3 and remain robust thereafter. Consumption growth above expectations in August August data on household consumption and income were published today. Real consumption rose by a strong 0.4% m-o-m in August, slightly above consensus estimates (+0.3%). Already published data on retail sales and car sales for August had been quite...

It has been a turbulent end to the summer for financial markets. The renewed market sell-off in China has reverberated across markets globally, as it amplified concerns, following the recent devaluation of the yuan, about the outlook for economic growth in China. We view recent developments on Chinese markets as a sharp correction rather than the start of a long-term bear market. In the meantime, the economic recovery in the US and the euro area continues to gain traction. Recent...

The ISM Manufacturing index continued to fall in August, whereas its Non- Manufacturing ounterpart remained pitched at historically very high levels. Taken together, recent indices point towards economic growth running above 4% in July-August. We continue to expect growth to prove robust in H2 2015. The ISM Manufacturing index fell further in August The ISM Manufacturing survey for August 2015 was published on Tuesday this week. The headline reading dipped further from 52.7 in July to...