Eurozone: Consumer confidence survey to soften – BNPP

Research Team at BNP Paribas, expects Eurozone consumer confidence to edge lower in September, to -9.0pts down from -8.5pts in August.

Key Quotes

“A moderate decline is consistent with the indicator’s recent downward trend, the squeeze on households’ real disposable income growth from the rise in energy prices since the start of the year and the broad-based weakening of Eurozone business surveys of late. The expected fall to -9 will still leave consumer confidence at above-average levels, and therefore, consistent with solid consumer spending growth. However, with confidence peaking in 2015, the trend is now one of gradual decline, consistent with our view that the overall economy will see some moderation in growth in H2 2016.

ECB President Mario Draghi will open the first European Systemic Risk Board (ESRB) annual conference in Frankfurt on Thursday, and give a keynote address to conference participants. ECB Executive Board Member Sabine Lautenschläger will also speak at the engagement as part of a panel. While the conference itself is mainly related to macro-prudential oversight of the EU financial system, the speakers could be prompt to discuss monetary policy-related issues.

In a recent speech, Ms Lautenschlager suggested that the ECB should not feel obliged to cut interest rates further and that she sees “no reason at the moment to change the key design elements of the [asset] purchase programme”. Instead, she called on governments to do more by completing the necessary economic reforms and strengthening the institutional foundation of the Eurozone. While reforms and judicious use of fiscal policy are clearly required to improve the Eurozone outlook, the case for a further extension of the asset purchase programme remains strong, in our view, given slowing growth and the Eurozone’s subdued inflation outlook.”