The Department of Analysis of Bankinter points out in its Strategy Report Second Quarter 2018 its forecast interest rates in the Eurozone for 2018 and 2019.
Forecast interest rates in the Eurozone for 2018 and 2019
If we continue to see changes until 2019. The European Central Bank (ECB) could make a first move with the deposit rate in midyear , up from -0.4% to 0.0% today. As for the reference rate , we estimate a slight increase towards the end of 2019 from 0.0% to 0.25%, coinciding with the end of the term Draghi front ECB (October 2019).
Analysis of forecast interest rates in the Eurozone
The expansionary cycle in the Economic and Monetary Union (EMU) is strengthened. GDP rose by 2.7% in the fourth quarter 2017 vs. 2.3% on average in the first half 2017. The advanced and reliable indicators recede slightly from highs but remain at high levels. We have recently revised upwards the growth prospects: + 2.5% in 2018 and + 2.1% in 2019 vs. + 2.4% and + 2.0% respectively above.
However, inflation remains largely absent in this growth cycle . The core CPI (1.0%) still far from the target ECB (close but less than 2%). The idle capacity is still high (8.6% unemployment), preventing wage pressure forming. In addition, the strong euro poses a risk to price recovery . The ECB is confident that the impact of the stimulus, acceleration cycle, the absorption of slack , and improved wages allow a gradual recovery in prices. Patience.
Although the CPI is far from the ECB target, the current economic expansion does not justify the maintenance of APP . We think the ECB asset purchases will end this year, with a gradual reduction from the 30,000 million euros / month in force until September. The recent elimination of the easing bias of the APP in the ECB statement (willingness to buy more bonds if conditions were unfavorable) points in this direction. Once we approach the end of the APP, the ECB will have to reformulate and make more specific your guide types. The current guidance (will remain at current levels until well after completion APP) is revealed as clearly insufficient.
As for guys, if we continue to see changes until 2019 . The ECB could make a first move with the type of deposit, in the middle of the year, up from -0.4% to 0.0% today. As for the reference rate, we estimate a slight increase towards the end of 2019 from 0.0% to 0.25 %, coinciding with the end of the term Draghi front ECB (October 2019).
The long – term rates will maintain an upward trend in the medium term . The TIR Bund could be located in the vicinity of 0.9% / 1.0% by the end of this year and 1.3% for 2019.