Eurozone: solid growth seen across multiple sectors, ECB to raise rates in 2019 - Wells Fargo


According to analysts from Wells Fargo, a broad-based expansion is firmly underway in the Eurozone, with consumer, investment and government spending all posting solid gains this year. They see the ECB raising rates sometime in mid-2019.

Key Quotes: 

“Economic growth in the Eurozone continued in Q4, with real GDP up 2.7 percent from a year ago. The broad-based expansion is firmly underway, with consumer, investment and government spending all posting solid gains this year. Unemployment has declined in recent months, and disposable income should continue to grow as businesses expand and inflation remains benign. This acceleration in economic activity has convinced the Governing Council that it can dial back its QE program, and we look for the ECB to end its bond buying in late 2018. The Governing Council has stated it will only begin to hike rates after the QE program ends.”

“We look for the ECB to hike its deposit rate in H1-2019 while keeping the overnight interbank rate and 2-week refinancing rate unchanged initially. We forecast that the ECB will then begin a slow process of raising all three policy rates in H2-2019.”

“As the ECB gradually begins to tighten, our currency strategy team looks for continued euro appreciation against the dollar over the coming quarters amid general greenback weakness and eventual monetary policy tightening.”

“While the Eurozone economy is experiencing an upswing in line with the overall global expansion, we must also acknowledge risks to our outlook, including political uncertainty in Germany and Italy, or another sovereign debt crisis similar to the one witnessed in 2010. Although risks are present and policy normalization will likely be slow, we look for the expansion to continue over the next two years, with real GDP rising 2.2 percent in 2018 and 2.0 percent in 2019.”

Strategy team expects that the euro will continue to trend higher vis-à-vis the greenback in coming quarters, as market participants start to price in the expected tightening measures by the ECB.”

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

EUR/USD holds above 1.0650 after US data

EUR/USD holds above 1.0650 after US data

EUR/USD retreats from session highs but manages to hold above 1.0650 in the early American session. Upbeat macroeconomic data releases from the US helps the US Dollar find a foothold and limits the pair's upside.

EUR/USD News

GBP/USD retreats toward 1.2450 on modest USD rebound

GBP/USD retreats toward 1.2450 on modest USD rebound

GBP/USD edges lower in the second half of the day and trades at around 1.2450. Better-than-expected Jobless Claims and Philadelphia Fed Manufacturing Index data from the US provides a support to the USD and forces the pair to stay on the back foot.

GBP/USD News

Gold clings to strong daily gains above $2,380

Gold clings to strong daily gains above $2,380

Gold trades in positive territory above $2,380 on Thursday. Although the benchmark 10-year US Treasury bond yield holds steady following upbeat US data, XAU/USD continues to stretch higher on growing fears over a deepening conflict in the Middle East.

Gold News

Ripple faces significant correction as former SEC litigator says lawsuit could make it to Supreme Court

Ripple faces significant correction as former SEC litigator says lawsuit could make it to Supreme Court

Ripple (XRP) price hovers below the key $0.50 level on Thursday after failing at another attempt to break and close above the resistance for the fourth day in a row. 

Read more

Have we seen the extent of the Fed rate repricing?

Have we seen the extent of the Fed rate repricing?

Markets have been mostly consolidating recent moves into Thursday. We’ve seen some profit taking on Dollar longs and renewed demand for US equities into the dip. Whether or not this holds up is a completely different story.

Read more

Forex MAJORS

Cryptocurrencies

Signatures