Euro area: Focus on inflation and unemployment rate – Danske Bank

Research Team at Danske Bank, suggests that in the euro area, they expect the euro area HICP inflation figures for May to indicate a low inflation number at -0.2% y/y similar to the level in April.

Key Quotes

“Core inflation should also remain unchanged at 0.7%, similar to April and thus not recovering to the 1.0% level seen in March.

Data for the euro area money supply developments for April is also due out. Growth of the M3 money supply averaged 5.0% leading up to April and we estimate the growth rate remained high with a further modest increase in April. We expect focus to be on bank lending figures, as they are key indicators for economic growth and important for the ECB's TLTRO II loans, determining whether banks will have a negative or zero interest rate on the loans.

Finally, euro area unemployment rate data for April is due out and we expect the declining tendency to continue. Specifically, we expect the unemployment rate to decline to 10.1% in April from 10.2% in March and, hence, narrow further towards the European Commission's estimate of the structural unemployment rate of 9.7%.”