informe perspectivas económicas Europa

BofAML - Viernes, 18 de Agosto

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Europe Economic Weekly: ECB: quizzical, cautious, constrained • The ECB shows nervousness on FX, but no action plan. Our QE call remains: Oct announcement of monthly EUR 40bn for Jan-Jun18. •   We look at Italy this week. The cyclical recovery is ongoing. But structural cost competitiveness remains a challenge.
•   UK: another downside CPI inflation surprise supports our below consensus forecasts. We cut our RPI forecast 25bp.

ECB minutes - nervous but not wiser

The ECB minutes show more nervousness about the latest FX developments than Draghi's guarded comments during the July press conference. The dovish tone reflects uncertainty but also limited room for a policy response. We continue to expect an October announcement that purchases will be scaled back to EUR 40bn from Jan to Jun-2018, and end in Dec18. We discuss details in our Weekly View.

Italy's recovery masks cost competitiveness challenge

Our focus this week is on Italy. The economy is participating in the Euro area's cyclical recovery. But its export sector has to cope with sluggish external demand (like the rest of the Euro area) and with an idiosyncratic cost competitiveness challenge. The underlying disconnect between wage growth and productivity is the result of structural features of the Italian economy. In our view, if left un-addressed, this will further weight on profitability, ultimately delaying the recovery process towards more capex.

UK: We remain dovish on inflationCPI inflation surprised on the downside again supporting our view that it will undershoot consensus and BoE forecasts are too high. Our end-2018 forecast is 50bp below consensus. We also cut our RPI forecast by 25bp to 2.5% for end-2018, even further below consensus than our CPI forecast. We discuss briefly our views on the UK Brexit position papers in our weekly view.

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