03 February 2005

EZA 665: ECB Council Preview March 2005 - Data update

Lates data leave EZA view unchanged: miexed cost/priceand deman/confidence signals: rates on hold even into 2006
Latest cost/price and demand/confidence data still giving mixed signals. Recent inflation picture improved but growing signs of oil-price feed-through at industry level. Weak Q4 GDP/domestic demand growth confirmed but Commision maintains upturn prediction for Q1 and raises forecast for Q2.

SummaryConclusion: We maintain view that rate cut off the agenda and no rate rise likely until growth seen firmly back to trend, late Q4 2005 or during Q1 2006.

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© Graham Bishop