GDP continues to grow slightly above potential, capacity utilization has been above-average for a fair while now, the improvement on the labor market continues, wages are edging up
The elections in the Netherlands served up no fundamental surprises: Forming a government will not be easy and will be followed by a degree of political instability.
Economic momentum at the start of the year remains strong, in line with our expectations. After slowing in 2016, trade momentum should be boosted by a lower EUR in 2017 (1.05 against the USD) and the global growth acceleration.
As expected, today’s ECB Council meeting was a non-event. The substantially improved economic data of late and the higher December inflation figure in the eurozone offered no grounds to put the recently extended bond purchasing program up for discussion again.
One higher inflation figure is not a tipping point, but the latest numbers (and good purchasing manager indices) show that surprises in every direction are possible.
The ECB is sticking with its loose monetary policy: Although the monthly bond purchases are to be reduced to EUR 60bn from April, they are set to continue until at least the end of 2017.
