Euro-area industrial production is likely to show a decline in December followingthe strong gain of 1.8% m/m in November. Most euro countries have publisheddeclines in industrial production for December.
In the UK the event of the week will be today’s Bank of England Inflation Report(IR). The MPC has indicated that the forward guidance framework will be reviewedin the IR as unemployment has come down rapidly to 7.1%. Although a wide range ofoptions are available (e.g. lowering the threshold to 6.5%, shifting to another targetmeasure etc.), we expect a shift towards more qualitative guidance. We believe theMPC will come to the same conclusion as the Fed and prefer softer communicationinstead of tying itself to a new measure. We would expect the general message to bethat the economy still needs low interest rates, that the MPC sees no immediate needto raise rates and that, when time comes, the move higher will be very gradual.
Two ECB speeches today: chief economist Peter Praet (12:10) and president MarioDraghi (16:30).
In Scandinavia focus will on Norwegian Q4 GDP, which we expect to show 0.5%q/q growth.
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Danske Bank