Eurozone: Publication of industrial production data

ECB – Monetary council meeting unlikely to bring any significant news

Eurozone – Publication of industrial production data

ECB should confirm monetary policy stance on Wednesday; “Greek question” to become more urgent

At next week’s meeting of the ECB council, we see little potential for any surprises concerning the monetary policy stance. The course was already set at the January meeting and monthly asset purchases of EUR 60bn started in March. The relatively good economic data coming out of the Eurozone recently will have no impact on monetary policy – at least not yet. Being only in the second month of the asset purchase program, ECB President Draghi has no choice but to confirm the current course of monetary policy, should he be asked to do so at the press conference.
With regard to Greece, Draghi will probably refer the press to the ongoing negotiations between Greece and its creditors and is unlikely to give any clear statement. However, via the emergency financing facility (ELA), the ECB plays a crucial role in the financing of the Greek economy. According to press reports, the financing limit was increased this week by EUR 1.2bn, which is significantly higher than the previous week’s increase of EUR 700mn. The obviously higher financing needs of Greek banks are, in our view, due to increased deposit withdrawals, which were triggered by the uncertainty over the upcoming IMF debt repayment. In the end, the obligation was honored by the Greek government. However, it remains to be seen as to whether the situation will calm down next week. It is certain that the week after next will bring crucial events. Greece was given until April 21 to present an improved list of reform measures, subject to approval at the meeting of Eurozone finance ministers on April 24. Should the list again not meet the requirements of creditors, a Greek default seems unavoidable. In this case the ECB would have to make a decision concerning the financing of Greek banks. In the run-up to these events, savings withdrawals by Greek depositors could already accelerate next week.

Eurozone – Publication of industrial production data on Tuesday

This coming Tuesday, the February data on industrial production will be released. Major leading indicators such as industry PMI indicate a further slightly rising industrial production. For France and Germany, the February data was already released this week. On average, industry production has thus risen slightly in both countries when compared to 4Q14. Overall, the data confirms the continued recovery of the Eurozone economy. We continue to expect at least a stable growth pace from the Eurozone economy in 1Q15 (in 4Q14, the Eurozone economy grew 0.3% q/q).