WEEK IN REVIEW: ECB acts against protracted period of low inflation and to boost lending
This week, the ECB has set out a broad range of measures to fight-off a protracted period of low inflation (which fell to 0.5%yoy in May) and to boost lending. You can read here our comment on the result of the meeting. The demand details of Euro area GDP show a significant decline in the contribution of net trade, due to weaker exports.
US employment was up 217k in May, a tad better than expected, and supporting the Fed’s move to gradually taper off its quantitative programme. The Fed is expected to reduce its monthly asset purchases by a further USD10bn when it meets again in two weeks’ time.
WEEK AHEAD: First activity numbers about Q2 to be released
The coming week will be dominated by the market impact of the ECB decision to unleash an ambitious programme of rate cuts and quantitative easing. In terms of data releases we will get news on the demand details of Portuguese Q1 GDP, April industrial production in the Euro area, and Q1 Euro area employment
9 June: Portuguese GDP demand details – the Portuguese statistics office has stated that the fall in GDP was mostly due to a negative contribution from net exports, while investment grew. The demand details will be important to determine whether the 0.7%qoq fall of the flash estimate is very worrying or could be reverted
12 June: Euro area April industrial production – Industrial production fell in March by 0.3%mom. Sentiment indicators suggest nevertheless that the economy is growing at a moderate pace, therefore we would expect an upward correction.
13 June: Euro area employment report – this report will be useful to know whether the decline in the unemployment rate is due to the fall in the unemployment or a fall in the labour force.