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Europe & ECB Review


Global growth has been more resilient than anticipated, even though central banks have been increasing rates at an unprecedented rate to try and slow down the demand side of inflation. Although there has been some improvement in the slowing of price pressures over the past year, rates are still well above the target of 2%. These dynamics have maintained tightening monetary policy and will continue to do so through Q2. As policymakers consider the cumulative effects of their actions and the tight labor markets, they will debate the pace of the hikes.

The Eurozone saw a stronger than expected round in preliminary PMI reports. These reports have bolstered growth forecasts and revived expectations for rate hikes, particularly in the UK. We continue to anticipate a half-point rate increase from the ECB in March and a further 25 basis points boost to rates by the BoE.

The S&P Global Eurozone Composite Output Index jumped to a 9-month high of 52.3 in February from 50.3 in the previous month. This was a broad-based improvement with the services number reaching an 8-month high at 53.0 and the manufacturing output index climbing to 50.4. The…

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