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Intesa Sanpaolo : Long-term inflation forecast remain distant from the goal

Intesa Sanpaolo : The ECB mentioned the exchange rate as one of the factors affecting the inflation outlook.

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Weekly Economic Monitor – 11. September  2020 Intesa Sanpaolo – Research Department


However, in the perception of market participant, the most important aspect was the upward revision of inflation forecasts for 2021, and (limitedly to 2020) growth forecasts.

The truth is that long-term inflation forecast remain very distant from the goal, and a new extension of the PEPP programme is still more likely than an unwinding of stimulus measures.

The week’s market movers

In the euro area , the German ZEW index, the first confidence index for September to be released, should show a correction for the expectation component compared to the previous months, as opposed to an improvement of views on the current situation.

The July industrial output reading should confirm the indications provided by data from individual countries, namely a further monthly improvement, which nonetheless will leave output deep in negative territory in year-on-year terms.

The second reading of data on consumer prices for August should confirm the fall of year-on-year inflation in the Eurozone as a whole (to -0.2% y/y), in France (to +0.2% y/y) and in Italy (to -0.5%).

This week, many important data releases and events are lined up in the United States .

The FOMC meeting should focus on clarifying the new monetary policy strategy. The Committee should confirm it is ready to inject further stimulus and prepare changes to forward guidance on rates and bond purchases.

The Empire Index should improve in September, but the Philly Fed is expected to correct somewhat, while remaining in expansionary territory. August data should prove to be generally solid: retail sales accelerating, industrial output and housing starts up further. Only consumer confidence should be weak in September, slightly worse than in August due to ongoing uncertainty on the evolution of the pandemic, and of fiscal stimulus.


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