29 July 2022 EZ Monitor German core HICP inflation is still rising; it will peak in September

HICP core inflation in Germany rose further in July; it will peak in September, at just under 4%.

Energy inflation in Germany is now falling, but upside risks in gas and electricity are still substantial.

ESI sank in July, adding to the evidence of a significant slowdown in the EZ economy.

Claus Vistesen (Chief Eurozone Economist)Eurozone

7 June 2022 ECB Hikes Could Lift Mortgage Rates by 300bp Through 2023

Mortgage rates in the EZ tend to trend in line with the main ECB policy rates, so they will rise this year.

Around a fifth of mortgages incur a variable rate and so are sensitive to changes in ECB policy rates.

Households can withstand higher borrowing costs, but growth in house prices will slow significantly.

Melanie Debono (Senior Eurozone Economist)Eurozone

28 Jan 2022 Resilient Consumer Sentiment Not Enough to Limit Fall in Spending

• Consumer confidence data in January point to a decent quarter for consumption in Q1...
• ...But other surveys and near-real-time data suggest otherwise. The good news is that Q2 will be better.
• Reactivation of the counter-cyclical capital buffer signals the return of "normality" for Swiss banks.

Melanie Debono (Senior Eurozone Economist)Eurozone

18 Jan 2022 Record House Price Growth will Keep the ECB On Its Toes

• Growth in EZ house prices accelerated at a record pace in Q3; at this rate, it will hit 10% soon.
• With most tailwinds still around this year, we expect further house price growth increases.
• This will put a floor on any slowdown in spending growth, but will also raise alarm bells at the ECB.

Claus Vistesen (Chief Eurozone Economist)Eurozone

14 Jan 2022 Draghi's Departure Wouldn't Change Italy's Outlook, Much

• Decent hard data lead us to raise our Q4 forecast for Italy, as for Spain, but GDP growth has slowed.
• Italian GDP likely rose by 0.8% in Q4; Q1's outcome will be little more than zero, as virus restrictions bite.
• An early election in Italy would put upward pressure on BTP yields, but it would prove short-lived.

Melanie Debono (Senior Eurozone Economist)Eurozone