Posted 12/12/2023, 10:43:11 PM
European Growth Stalling as Inflation Cools Faster Than Expected
- European economy is weakening quickly, with manufacturing and services in mild recession
- Inflation is falling faster than expected, driven by declining energy prices and supply chain issues
- Wage growth remains high at around 5%, risking increased inflation in 2024 if it continues
- ECB interest rate hikes are still feeding through to the economy, suggesting rates have been tightened too much
- ECB risks being too slow to cut rates, with cuts needed by summer 2024 to avoid overcooling the economy