Intesa Sanpaolo: The ECB’s monetary policy meeting on 28 October will not lead to any changes in the monetary policy framework.
Weekly Economic Monitor – 22 October 2021
Intesa Sanpaolo – Research Department
President Lagarde will seek to cool premature rate hike expectations expressed by markets, which have so far resisted verbal interventions by other Governing Council members.
Italy – The Draft Budgetary Plan illustrates how the resources contained in the 2022 budget package will be distributed (almost EUR 24 billion in all, or more than 1.2% of GDP). More details on the various measures (in particular, on how the announced cut in the tax wedge will be implemented, with an additional EUR 6 billion on top of EUR 2 billion already envisaged in previous laws) will be included in the detailed Budget Law expected in the coming days.
The week’s market movers
In the euro area , the week looks rich in data. The focus will be on the monetary policy meeting of the European Central Bank and on preliminary estimates of GDP in the Eurozone aggregate and in the four main member countries, which should confirm a still solid growth framework in the 3rd quarter. The recovery is expected to decelerate during the Autumn, in line with indications expected from the upcoming Istat and EU Commission surveys for October. The Ifo index, on the other hand, may rise back. The flash estimates for October should outline an acceleration of inflation in Germany, France, Italy and in the euro area. This week’s agenda also includes the release of data on the German labour market for October and on household spending in France in September.
This week in the United States all eyes will be on the first estimate of 3Q GDP, that should highlight the effects of supply-side bottlenecks on growth. The progress made over the summer should be around half the result achieved in 1H 2021, following the dramatic slowdown of consumption and the weakening investment trend, due to supply shortages. October Consumer confidence should confirm last month’s retracement, due to concerns over inflation and the end of fiscal stimulus. September personal spending and income are expected higher, and the core deflator should change by 0.2% m/m. Orders of durable goods and new home sales in September should provide moderately positive signals, despite persistent supply side-bottlenecks.
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