New forecasts for the Eurozone

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Week Ahead 

The economic slowdown in the euro zone in the second half of 2018 was significantly stronger than originally expected and lowered the starting position for 2019. This makes it unlikely that the economy will have gained enough momentum by autumn to trigger an initial interest rate hike by the ECB. At the same time, however, the weakness in growth can be traced back considerably to individual temporary factors, and it therefore appears likely that the economy will pick up in the coming quarters. All in all, this means for us that the first interest rate hike (deposit facility) will be postponed by six months to March 2020. The expectation of a slower rise in yields of German government bonds is also linked to this.