Fears are still dominating markets after the wave of downbeat announcements and data released by major economies ahead of the release of the ECB bulletin and industrial production for the euro area later on today.
The slowdown in European data, dismal reports from U.S. and China and drop in stocks are causing a wave of pessimism in markets that global recovery is losing momentum.
After the pleasant second-quarter data released in the euro zone and UK, data released starting from July are showing that recovery is waning.
Trichet said in August that growth is expected to slowdown in the second half of the year. Today, the bulletin is expected to summarize what Trichet mentioned in the press conference following August's rate decision.
At the beginning of the current month, Trichet's tone was hawkish as he expressed his pleasure with the stress test results and second-quarter strong data, but policy makers refrained from announcing any cut in bond purchases, despite the improvement signaled recently.
Trichet revealed that euro-area money markets are showing progress, yet they are not back to their pre-crisis levels. He said growth is predicted to be moderate but uneven as there continues to be risks.
With regard prices, he mentioned that inflation pressures remain under control over the medium term, yet prices are estimated to show some volatility. He added that “Inflation expectations in the medium to longer term remain firmly anchored.” For 2011, “inflation should moderate, benefiting from low inflation price pressures.”
Nevertheless, he did not change his economic forecasts for the economy, where in the coming meeting new growth and inflation projections will be announced.
Industrial production for the month of June is due today, where expectations refer to a decline to 0.7% from 0.9%, while on the year the reading is estimated to inch down to 9.3% from 9.4%.
Yet, the main focus for the rest of the week will be on second-quarter GDP data for the euro area, where Europeans are waiting for strong data like the UK.
