Combine rebounding investment with continued strength in private spending and you have a recipe for stronger economic growth. October's set of data suggests that GDP growth in the fourth quarter is likely to beat the 3.7% year-on-year rate posted in the third. At the same time, inflation is declining, which paves the way for another rate cut in December
Intuitively, a deal with Russia would help euro rates higher, but falling gas futures are already pushing down the curve through lower inflation expectations. Tensions with Russia are likely to stay, which means risk sentiment should remain fragile
We've been here before, but prospects of a peace deal in Ukraine are starting to show in FX. CEE FX is holding last week's gains, and EUR/CHF is now also edging back above 0.93. Lower energy prices should be supportive for the euro. Further progress on peace discussions and potentially a softer Fed Beige Book on Wednesday could see EUR/USD hold 1.1500
Romanian Inflation eased marginally in October to 9.8% versus September’s 9.9%. Declines in some food prices provided relief, but services inflation remains tricky. Wage growth slowed to just 4.1% in September, acting as a clear drag on demand. We maintain our year-end inflation forecasts at 9.6% for 2025 and 4.5% for 2026
Oil prices settled lower yesterday with a large increase in US crude oil inventories, while surplus expectations for the global oil market will also be providing some headwinds
The National Bank of Poland (NBP) has repeatedly warned of upside risks to inflation over the medium term, but this has not prevented the central bank from cutting rates as inflation moderates. Rate-setters have cut rates at each policy meeting since July, and we expect another 25bp cut on 5 November
Italy's October inflation numbers show a marked deceleration. This is very much an energy and fresh food story, against stable core inflation. As we don’t expect an imminent change to the pattern, we're trimming our forecast for average 2025 headline inflation to 1.6%
Pricing in Czech production points to strength in domestic sectors such as services and construction, while declining prices in industry indicate that underlying fragility persists. We see potential underperformance of the eurozone as the sword of Damocles for Czech exporters. The Czech National Bank will live in a double-faceted world for some time
The tone of NBP President Adam Glapinski’s press conference suggested openness to another interest rate cut in November. The new inflation projection, and macroeconomic data published before the November Council meeting will be important in shaping this decision. We assess the probability of another cut in November to be well above 50%
Unprocessed food was mainly responsible for Czech headline inflation ticking lower. Meanwhile, pricing in services remains robust, and may affect inflation expectations. One softer-than-expected inflation print is unlikely to alter the central bank's hawkish stance. We'd need to see more relaxed core inflation and disinflation in services first
Last week's US data was in general good, but today's sentiment and labour data remind us that not everyone is feeling so positive. This is a constraint on US growth prospects and suggests the Fed will retain an easing bias through the rest of the year
The pickup in inflation to 2.2% in September was mainly due to energy effects, which will fade in the months ahead. A small undershooting of the inflation target actually seems realistic around the turn of the year. Expect the ECB to hold rates steady for now
Headline inflation in the Netherlands surged well above expectations in September. Although a swift return to a more normal pace wasn’t anticipated, today’s data illustrates just how persistent price pressures can be
Headline inflation has increased to its highest level since the spring, but other German macro data published today suggests that inflation will not be the economy's biggest problem in the months ahead
With all driving factors set to remain in place, we expect inflation in Italy to continue to move within a narrow sub-2% band over the fourth quarter and confirm our forecast for average 2025 inflation at 1.7%
Inflation in the eurozone ticked up from 2% to 2.1% in August on the back of slowing energy price declines. Core inflation remained unchanged at 2.3%, confirming a rather stable inflation climate despite ample risks to the outlook
Japan’s July consumer price inflation data was broadly in line with the market consensus. Headline inflation slowed thanks to falling energy and utility prices. Yet, core prices remain sticky and well above 3%. We believe core price trends will prompt the BoJ to hike rates as early as October
The industry's annual price drop deepened in July, marking six consecutive months of negative price trends. Weak demand from key trading partners continues to weigh on prices for capital and intermediate goods, while consumer goods prices are still rising. Strong price activity in food production will further drive up the CPI
Polish headline inflation has been confirmed at 3.1% YoY in July, from 4.1% YoY in June, as the effect of the partial unfreeze of energy prices in mid-2024 died out. With inflation within the tolerance band of the National Bank of Poland's target (2.5%, +/- 1ppt), the central bank now has room to continue its monetary easing cycle
In the space of a few weeks, the situation in Europe has changed radically, notably as a result of JD Vance's Munich speech and the rapprochement between the United States and Russia over peace in Ukraine, as well as questionings about European security raised by Trump’s announcements. For European countries, these events have been an ‘electroshock’, and they quickly announced a plan to increase defence spending by up to €800bn.
Yesterday, the ECB lowered its GDP forecasts for this year and next, confirming a downward trend in forecast revisions.US tariffs and fiscal stimulus in Germany represent opposing risks for GDP trajectory.
• Fresh tariff concerns last week gave the USD renewed support. US data, however, are dimming the near-term economic growth outlook. This combination poses headwinds for pro-growth currencies, in our view.
• A potential ceasefire in Ukraine, greater fiscal spending in Europe, and country-specific factors should continue to shape European currencies, but clarity on these drivers still remain scarce.
t the time of writing, we estimate that Ukraine sovereign credit is already pricing a ~60% probability of a lasting ceasefire. Investor optimism on European equities has been strong so far this year, and the potential for a peace deal has added fuel to a ~10% rally year to date in European equities.
While Germany is still digesting and debating Sunday's election results, the latest Ifo index reading suggests that the economy remains stuck in stagnation.
