Wells Fargo : Will The European Central Bank Ease Further?

[Rajesh Desai]

The European Central Bank held its first policy meeting of the new year this week and, as widely expected, did not make any changes to its policy stance. Most analysts had expected that the ECB would remain on hold due to recent signs that the recovery underway in the Eurozone continues, albeit at a tepid pace. The Economic Confidence index in the euro area rose for the eighth consecutive month in December, and it now stands at its highest level since mid-2011 when the Eurozone slid back into recession. More importantly, “hard” data are corroborating the optimism that the survey data are indicating. Retail sales in the euro area rose 1.4 percent in November relative to the previous month. Not only was the outturn significantly stronger than the consensus forecast, but it was the largest monthly increase in four years. The 1.9 percent rise in German industrial production in November adds to the evidence that the German factory sector is gaining strength again.

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CA. Rajesh Desai