French inflation unexpectedly slows
Skyline from the Arc de Triomphe in Paris, France.
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Inflation in France slowed to 6.7% in December from a record high of 7.1% the previous month, preliminary figures published on Wednesday morning showed.
Economists polled by Reuters had forecast year-on-year consistent inflation, adjusted for comparisons in the euro area, to come in at 7.2%.
The most significant decline was in energy, where prices rose 15.1% annually, down from 18.4% in November.
This follows higher-than-expected inflation in Germany, which reported a fall in the HICP to 9.6% from 11.3% on Tuesday; and in Spain, which fell from 6.7% last week to 5.8%.
Analysts are looking for signs that inflation has peaked in the euro area’s main economies; And whether it will affect the European Central Bank, which previously said interest rates would have to go “significantly” higher.
ING analysts said the path to substantially reducing inflation will not be easy and will depend on agricultural challenges affecting energy markets and food prices.
,[Germany’s] The inflation numbers are not a relief, however, only a reminder that eurozone inflation is still primarily an energy price phenomenon,” he said in a note. “The ECB cannot base its policy decisions on highly volatile energy prices. Nor will he.”
Italy will report on inflation data on Thursday, followed by a flash estimate for the euro zone on Friday.
Swiss annual inflation at 2.8% in 2022
The Swiss Federal Statistical Office said today that Swiss consumer prices rose 2.8% year-on-year and decreased 0.2% in the month of December.
It found that Swiss inflation is projected to average 2.8% in 2022, up from 0.6% in 2021. It attributed the annual increase to the higher cost of petroleum products, gas, cars and home rentals, which offset price declines for medicines and fixed-line and mobile communications.
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Goldman Sachs says US will avoid recession in 2023
Goldman Sachs has given an outside consensus forecast for the US economy in 2023.
“Our economists believe the US will avoid a recession as the Fed successfully makes a soft landing of the economy,” the analysts wrote Tuesday.
“This forecast outside consensus partially reflects our view that a period of lower-than-potential growth is sufficient to gradually rebalance the labor market and ease wage and price pressures,” the note said. ” “But it also reflects our analysis which indicates that fiscal and monetary policy tightening will lead to a sharp easing next year, contrary to the consensus that the effects of interest rate hikes will lead to a recession in 2023.”
In addition, the bank today raised its 4Q22 GDP growth forecast by 10bp to +2.1% on the back of a surprisingly strong November construction spending release
“The divergence between the resilience of the US economy in 2022 and the downdraft experienced by stocks has been a dominant narrative of the past year,” Goldman said. “And, whether this disconnect continues, or whether the economy matches the market’s downdraft, or whether the market returns in the wake of an economic soft landing may be at least part of the 2023 narrative.”
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European markets: Here are the early calls
European markets are headed for a higher open on Wednesday as investors await the latest US Federal Reserve minutes, looking for signs of more interest rates to come.
British FTSE 100 The index is expected to open Germany up 11 points at 7,570. dex France’s up 28 points at 14,227 CAC up 9 points at 6,643 and Italy ftse mib rose 31 points to 24,449, according to IG data.
Markets in Europe closed higher on Tuesday, buoyed after Germany published lower-than-expected inflation data for December, which eased to 9.6% year-on-year. Inflation data from France is due on Wednesday.
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