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Alexis Tsipras's surprise decision to call a referendum on proposals by Greece's creditors marked the end of negotiations. An agreement in principle on a number of issues had been found, but one key component was missing: the conditions governing a further debt restructuring. Tsipras is doing a balancing act between pressures from Syriza's left wing and the creditors, and in doing so is gambling his political survival.
Highlights: In Central Europe, the standard of living is calculated according to GDP at purchasing power parity per capita. The Algerian Prime Minister sounds the alarm. Decoupling in variations in Nigerian naira and Angolan kwanza against the dollar. India posts an improvement… in industrial production. Brazil must solve its inflation conundrum.
We have had to revise down our cautiously optimistic March outlook slightly, for two reasons. First, US growth will be lower than expected in 2015 due to a disappointing first quarter. Secondly, the slowdown in the emerging countries will be a little more marked than originally forecast, with recessions in particular. Despite the improved outlook for growth in the Eurozone, the world economy as a whole is ultimately set to grow more slowly in 2015 than in 2014, before a rebound in 2016.
This publication presents the economists' forecasts for interest rates, exchange rates and commodity prices, along with the Crédit Agricole Group's central economic projection.
The positive surprises provided by Swedish inflation data in May and the rebound in inflation expectations have lowered the odds of a rate cut from the Riksbank at its next meeting (1 July, announcement of decision on 2 July). We expect the Riksbank to leave the repo rate unchanged at -0.25%. We have delayed our expectation of a 10bp cut in the repo rate to September.
There was no change in the fed funds target range (0 to 0.25%) or the FOMC's portfolio reinvestment policy at today's meeting. The FOMC continues to anticipate that "it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term."
Draghi's "get used to volatility" comment should not be misinterpreted as an inflexible ECB stance. The ECB has kept a dovish bias, which suggests that it would respond to unwarranted monetary tightening eventually in case bond yields (especially real yields in the periphery) and potentially the EUR continue to grind higher.
Edition July 1, 2015
Poland: Inflation & MM rate
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