• This week's economic data were pretty mixed, with the ambivalent US GDP report (poor headline, much better details) moving center stage yesterday. EMU economic numbers were more constructive on balance, although sprinkled with some national weak spots. But none of the figures was able to challenge our guardedly optimistic global economic outlook.
  • Next week will be central bank week in Europe! Given the OMT-induced virtuous dynamics of economic confidence, financial environment and (upcoming) activity, we expect the ECB to remain on hold next Thursday. Nevertheless, Draghi's "tone" on improving sentiment, the stronger euro as well as the larger-than-expected early LTRO repayments should deserve close monitoring.
  • The BoE meeting will be less interesting, with its policy stance most likely unchanged, and no press conference is on the agenda. CEE central banks, in contrast, will remain in an easing mode, although the cycle is well advanced. Following Hungary this Tuesday, Poland's central bank will cut its key rate next week for the second time this year. With a zero interest rate already in place, the Czech bank should opt again to use the FX channel.
  • Industrial production data for late 2012 to be released next week should show decent growth in Germany, Italy and the UK. While not "saving" 4Q12, this bodes well for the current quarter, with the German economy expected to grow again and the euro area to stabilize. EMU periphery and CEE will lag behind.
  • European disinflation continues to profit from (the after effects of) lower commodity prices as well as the economic slack. We expect EMU harmonized January CPI to fall to 2%. China's CPI figure (to be released on Friday next week) will fall back again to a similar level due to a one-off effect. The trend in China, however, is already pointing north, fueled by higher domestic food prices and housing costs – although not reaching alarming altitudes in 2013.